Summerlin Law Offices Applies Overhead to Clients Based on Direct

question 61

Multiple Choice

Summerlin Law Offices applies overhead to clients based on direct labor hours. The office manager determined that overhead will be applied at a rate of $25 per direct labor hour. The static budget for the month of November showed an estimated 2,500 direct labor hours would be incurred. During November, 2,800 direct labor hours were actually incurred and actual overhead costs were $58,800. What should be the total overhead cost according to the firm's flexible budget for November?

• A) $70,000
• B) $58,800
• C) $62,500
• D) $52,500

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Definitions:

Equity Buffer

Additional equity maintained by a financial institution above the regulatory minimum to absorb potential losses.

Ratios

Ratios are financial metrics derived from a company's financial statements, used to evaluate aspects such as its profitability, liquidity, and solvency.

Ratio Computation

The process of calculating financial ratios, which are mathematical tools used to analyze and compare financial statements.

Income Before Taxes

A financial measure indicating the profitability of a company before accounting for its tax expense.