A company has two production departments: Cutting and Finishing. The overheads and operating hours for the two departments are: Cutting 210,000 60,000 machine hours 6,000 labour hours Finishing 200,000 5,000 machine hours 20,000 labour hours

What should be the basis for overhead absorption?:

Labour hours for Cutting and machine hours for Finishing

Machine hours for Cutting and labour hours for Finishing

Machine hours for both departments

Labour hours for both departments