The Overdale plant has two categories of overhead: maintenance and inspection.

The Overdale plant has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows:

Maintenance

A??L120000

Inspection

A??L200000

The plant currently applies overhead during direct labour hours and expected capacity of 80000 direct labour hours. The following data has been assembled for
use in developing a bid for a proposed job:

Direct materials

A??L1500

Direct labour

A??L5000

Machine hours

400

Number of inspections

6

Direct labour hours

750

Using direct labour hours to assign overhead the total cost of the potential job would be:

A??L9500

A??L6000

A??L3000

A??L1600