3/8 Department A Department B Direct materials costs $1 10,000 $100,000 Direct labor hours 2,000 10,000 Machine hours 80,000 1,000 Variable manufacturing overhead per labor hour $0.5 $2 Variable manufacturing overhead per machine hour $1 $0.2 Fixed manufacturing overhead cost $60,000 $50,000 Wage per labor hour $ 10 $10 The company has recently completed Job 100 with the following cost information: Department A Department B Direct labor hours 10 200 Machine hours 100 10 Direct materials cost $5,000 $3,000 Instructions: (a) Choose appropriate allocation base for Ryan's Sportswear Ltd. and explain your choice. (2 marks) (b) The company uses predetermined overhead rates to apply manufacturing overhead cost to jobs. Based on the allocation base you have chosen, calculate the total overhead costs applied to Job 100. (7 marks) (c) If the company uses absorption costing, calculate the total production cost for Job 100. (3 marks) (d) Someone told Mr. Ryan that if he could manipulate his estimation on the units of allocation base when calculating the predetermined overhead rates, he may have a big boost in the net operating income at the end of the year. Explain why manipulating the units of allocation base could lead to a boost in the net operating income? Should Mr. Ryan do such manipulation? (4 marks)