A business, that provides a service, expects to incur overheads totalling £20,000 next month. The total direct labour time worked is expected to be 1,600 hours and machines are expected to operate for a total of 1,000 hours.

During the next month, the business expects to do just two large jobs.

Information concerning each job is as follows:

How much of the total overheads will be charged to each job if overheads are to be charged on:

(a) a direct labour hour basis; and

(b) a machine hour basis?
What do you notice about the two sets of figures that you calculate?

Transcribed Image Text:

Job 1 Job 2 Direct labour hours 800 800 Machine hours 700 300