What is the total project overhead for a project lasting 3 months with the following costs: Labor 4,000; Materials 9,500; Equipment rentals 1,200; Superintendent's annual salary 36,000; Office rent 800 per month; and office utilities 375 per month?

What is the total project overhead for a project lasting 3 months with the following costs: Labor 4,000; Materials 9,500; Equipment rentals 1,200; Superintendent's annual salary 36,000; Office rent 800 per month; and office utilities 375 per month?

• A. Less than $12,000
• B. About $12,500
• C. About $13,000
• D. About $15,000

Answer: (A)

Overhead is the portion of costs that supports the project but isn’t direct labor or direct materials. To find the total overhead for a 3-month project, allocate the superintendent’s salary for the project duration: 36,000 × 3/12 = 9,000. Include other indirect costs tied to the project, such as equipment rentals used on the site: 1,200. Office rent and utilities are often treated as general office overhead and not charged to a specific job, so they’re not included here. Add them up: 9,000 + 1,200 = 10,200. That amount is under 12,000, so it best fits the option indicating less than 12,000. If you included office costs, the total would be higher (around 13,700).

Overhead is the portion of costs that supports the project but isn’t direct labor or direct materials. To find the total overhead for a 3-month project, allocate the superintendent’s salary for the project duration: 36,000 × 3/12 = 9,000. Include other indirect costs tied to the project, such as equipment rentals used on the site: 1,200. Office rent and utilities are often treated as general office overhead and not charged to a specific job, so they’re not included here. Add them up: 9,000 + 1,200 = 10,200. That amount is under 12,000, so it best fits the option indicating less than 12,000. If you included office costs, the total would be higher (around 13,700).