What is the overhead to be charged against project decision

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Brunto is considering a new project but is unsure how much overhead to include in the calculations to help him decide whether or not to proceed. Existing fixed overheads are absorbed at the rate of £8 per hour worked. Brunto is certain that the project will involve an incremental 500 labour hours. The project will involve extra machine running costs and these variable overheads cost him £4 per hour. The number of extra machine hours is expected to be 450 hours. The difference between this figure and the 500 labour hours above is expected idle time. The project will require a little more temporary space that can be rented at a fixed cost of £1,200 for the period of hire. The overhead is not included in the fixed overhead absorption rate above.

Problem 1: What is the overhead to be charged against the project decision?

Reference no: EM132826569

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