Question 2

a. Assuming that 90,000 direct labour hours are used as the only overhead cost allocation base, calculate the amount of overhead that would be allocated to the new job and the total cost of the new job. (2 Marks) 1}. Assuming that an activity-based costing system is used, calculate the amount of overhead that would be allocated to the new job and the total cost of the new job. (5 Marks) Question 2: T Marks Gilmore Group has four overhead cost pools. Next year the expected overhead costs and the expected activity for the four activity-based cost drivers that would be used for each cost pool are as follows: Overhead cost pools: Activitybased cost drivers: Maintenance $315,000 Machine-hours 45,000 hours Materials handling $135 ,000 Material moves 9,000 moves Setups $112,50CI Setups 450 setups Inspection $225 ,000 Quality inspections 18,000 inspections The production manager is submitting a bid for a new job that she believes will result in Jture growth for the organisation. The following estimates are for the new job: Direct material $11,250 Direct labour (1,700 hours) $17,000 Number of material moves 13 Number of inspections 12 Number of setups 7 Number of machine-hours 625 Required: Show all workings for the below calculations