What is the overhead amount calculated for Acme Plumbing when its sales are $675,000 with an overhead rate of 22%?

To calculate the overhead amount for Acme Plumbing based on its sales and the overhead rate, you multiply the total sales by the overhead rate percentage. In this case, sales are $675,000, and the overhead rate is 22%.

To find the overhead amount, you can use the following calculation:

Overhead Amount = Sales × Overhead Rate

Overhead Amount = $675,000 × 0.22

Overhead Amount = $148,500

This calculation shows that the overhead amount of $148,500 is determined directly and stems from applying the overhead rate to the total sales. Understanding how to perform this calculation is crucial, as it allows businesses to assess their operating expenses accurately and make informed financial decisions regarding sustainability and profitability.