Overhead is allocated on the basis of direct labor hours.
Variable overhead costs include materials and supplies at $4.50 per
direct labor hour. Fixed overhead costs include depreciation on
equipment and vehicles of $25,000 and miscellaneous other
job-related expenses of $10,000. There is also indirect labor of
$6,500.
My answer:
Variable OH Cost per hr * Time to complete job = $4.50 x 2.5 =
$11.25
Fixed Overhead Costs/Total budgeted hrs = (25,000 +
10,000)/13.750 = 2.55 (Do I include Indirect Labor in Fixed
OH costs?)