2. ABC Co. estimates that for the year 2019-20, its overhead cost will be Rs. 10,00,000. It can use either Direct labour hours, Direct labour costs or Machine hours as the allocation base. Estimated Direct labour hours are 40,000 hours, direct labour costs are Rs. 25,00,000 and machine hours are 25,000 hours. Item A takes Rs. 10,000 as direct labour wages to produce. Calculate the overhead allocated for Item A. (data same as Problem 1)

1 point

Rs. 4,000

Rs. 6,250

Rs. 2,500

Rs. 1,000