Larry's employer offers fringe benefits that cost the company $5 for each hour of employee time (both regular and overtime). During a given week, Larry works 45 hours but is idle for 4 hours due to material shortages. The company treats all fringe benefits relating to direct labor as added direct labor cost and the remainder as part of manufacturing overhead. The allocation of Larry's wages and fringe benefits for the week between direct labor cost and manufacturing overhead would be:
Direct Labor................... Manufacturing Overhead
A) $720......................... $265
B) $861......................... $124
C) $760......................... $225
D) $656........................ $329