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76 PROBLEM 4 Hanover Manufacturing has four categories of overhead. The four categories and expected over- Maintenance Materials handling Setups Inspection Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct head costs for each category for next year are listed below: $200,000 32,000 100,000 120,000 The company has been asked to submit a bid for a proposed job. The plant manager thinks labour hours. For next year, 50,000 direct labour hours are budgeted. ose pour in new business in future years. Usually bids are based upon full manufacturing Estimates for the proposed job (Job No. P902) are as follows: plus 20 percent. $6,000 $10,000 Direct materials. Direct labour (1,000 hours). 500 Machine hours 12 Number of material moves.. 2 Number of setups 10 Number of inspections In the past, full manufacturing cost has been calculated by allocating overhead using a volume. based cost driver (direct labour hours). The plant manager has heard of a new way of applying overhead that uses cost pools and cost drivers. Expected activity for the four activity-based cost drivers that would be used are: Machine hours 20,000 Material moves 1,600 Setups 2,500 Quality inspections....... 4,000 Instructions: 1. a. Determine the amount of overhead that would be allocated to the proposed job if a plant- wide rate with direct labour hours used the unit-level driver