Autocar SpA, a motor vehicle manufacturer, has a research division that worked on the following projects during 2009: 

Project 1 — the design of a steering mechanism that does not operate like a conventional steering wheel, but reacts to the impulses from a driver's fingers. Project 2 — the design of a welding apparatus that is controlled electronically rather than mechanically. 

The following is a summary of the expenses of the above research department: 

The departmental head spent 15 per cent of his time on Project 1 and 10 per cent of his time on Project 2. 

Determine the costs to be capitalised.

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Amounts in thousands of euro Material and services Labour Direct labour Department head salary Administrative personnel Overhead Direct Indirect General 128 400 725 270 Project 1 935 620 340 110 Project 2 620 320 1 410 60