Autocar Inc, a motor vehicle manufacturer, has a research division that worked on the following projects during 2004:

Project 1 – The design of a steering mechanism that does not operate as a conventional steering wheel, but reacts to the impulses from a driver’s fingers.

Project 2 – The design of a welding apparatus that is controlled electronically rather than mechanically. The following is a summary of the expenses of the particular department:

The departmental head spent 15 percent of his time on Project 1 and 10 per cent of his time on Project 2.

Required

Determine the costs to be capitalized.
 

Amounts in thousands of euro General Project 1 935 Project 2 620 Material and services 128 Labour Direct labour Department head salary Administrative personnel 620 320 400 725 Overhead Direct Indirect 340 410 270 110 60