Job Pricing with Labor, Overhead, and Markup

Steps:

• Calculate direct labor cost: 30 hours × $25/hour =$750.
• Calculate absorbed overhead: 30 hours × $10/hour =$300.
• Find total cost: $750 +$300 = $1,050.
• Apply 20% markup: $1,050 × 1.20 =$1,260.

Why D is correct:

• Total price equals total cost (labor + overhead) plus 20% markup, per standard absorption costing formula.

Why the others are wrong:

• A: Ignores markup; $900 understates by excluding 20% on full cost.
• B: Likely adds partial overhead ($750 +$200); misses full $300 overhead.
• C: Applies 20% markup only to labor ($750 × 1.20 +$300 = $1,200); excludes overhead from markup base.

Final answer: D