The Choi Company budgets variable manufacturing overhead at 60% of direct labour costs. The company estimates that 10,000 direct labour hours will be used at an average rate of $8.50 per hour. Fixed manufacturing overhead costs are budgeted at $45,000 with $10,000 of that amount being depreciation on plant machinery. Total budgeted manufacturing overhead will be:

$130,000

$96,000

$120,000

$86,000

Please explain how to do it step by step. Thank you