1. XYZ Company purchased equipment to use in their business. In order to use this machine specifically for their business, they had to make modifications to it (self-constructed asset). Their cost driver for allocations is labor hours, totalling to 600 hours worked directly towards to construction project, with 50 employees. The equipment costed XYZ $500,000 (initial investment), which they acquired specific borrowings for. XYZ has correct amounts on their cost schedule for the equipment, but we must understand the rationale behind these numbers. For example, their costs allocated to the employee wages was $17,917 ($215,000 wages / 600 hours * 50 employees). On April 1, XYZ purchased indirect supplies for $45,000, and had supplies on hand of $6,000, and worked on this equipment for 3.5 months. What is the allocation amount for materials on XYZ's cost schedule? Explain your rationale and how you calculated this amount.