The four categories and expected overhead costs for each category for next year are as follows:

Maintenance	$140,000
Materials Handling	$60,000
Setups	$50,000
Quality Inspection	$100,000

Currently, overhead is applied using a predetermined overhead rate based on budged fier liber hours. Fifty thousand (50 000) direct labour hours are budgeted for next year.

The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years; Usually bids are based on full manufacturing cost plus 30 percent.

Estimates for the proposed job are as follows:

Direct Materials	$5,000
Direct Labour	$7,500
Number of Machine hours	300
Number of materials moves	8
Number of Setups	3
Number of inspections	5

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 different 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:

Overhead Category	Cost Driver	Expected Activity
Maintenance	Machine Hours	16,000
Materials Handling	Number of materials moved	4,000
Setups	Number of setups	2,000
Quality Inspection	Number of inspections	8,000

Answer:

a) Calculate amount of overhead that would be applied to the proposed project if activity-based costing is used

b) Calculate total cost of the proposed job of activity based costing is used