It applies to all of your military times - this allows them all to add up correctly at the end. Otherwise there's be no way they could add up properly. For example, if you only applied it to your total then you'd have say 2800 total time but if you added up your single-engine, multi-engine, etc without the conversion you would only come up with say 2400 hours. If you have 2800 hours total the various categories all need to combine to show those 2800 hours. Like has been mentioned on other posts, the matrix works out neatly when it's right but it can be a pain to get it that way. I broke it down into two parts - the military part, and the civilian part of my logbook. The 1.2 applies accross the board to the military, but not to the civilian time. The two added up properly in the end.
Hope this helps.