A contractor's annual overhead is $120,000 and expects about $600,000 in direct job costs for the year. To recover overhead evenly, approximately what percentage should be added to each job's direct cost for overhead?

Giải thích

Overhead recovery rate = annual overhead / annual direct costs = 120,000 / 600,000 = 0.20 = 20%. Adding 20% of direct cost to each job spreads the overhead across the year's work. Correct answer is 20%. '12%' and '5%' understate the ratio. '25%' would result from dividing 120,000 by 480,000, an incorrect base.