Jones Plumbing Estimates That Its Overhead Costs for the Year

question 45

Multiple Choice

Jones Plumbing estimates that its overhead costs for the year will be $800,000 and it has decided to use direct labour hours as the cost driver. Its mark-up is 20% on cost. If a job for Martin Z used $800 of direct materials and 5 labour hours at $50 per hour how much will Jones Plumbing charge Martin Z?

• A) $960
• B) $800
• C) $2,460
• D) cannot be calculated from the information given

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