An advertising agency is estimating costs for advertising a music festival. The job will require 340 direct labor hours at a cost of $78 per hour. Overhead costs are applied at a rate of $79 per direct labor hour. What is the total estimated cost for this job?

$53,380

Explanation:

Total estimated cost is function of two cost element; direct labor cost and overhead costs. The overhead cost is in turn a function of direct labor hour.

Considering these cost elements;

Direct labor hours = 340

Direct labor cost per hour = $78

Direct labor cost  = $78 × 340 = $26,520

Overhead costs per direct labor hour = $78

Overhead costs = $79 × 340 = $26,860

Total estimated cost for this job = $26,860 + $26,520  = $53,380

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