A company has an overhead application rate of 125% of direct labor costs.How much overhead would be allocated to a job if it required direct labor costing $20,000?

A) $5,000.
B) $16,000.
C) $25,000.
D) $125,000.
E) $250,000.

Overhead Application Rate

A method for assigning indirect costs to produced goods based on a formula, often related to the level of production activity.

Direct Labor Costs

The total cost of workforce directly involved in the production of goods or services, typically including wages and salaries of manufacturing or production employees.