Final answer:
The total overhead cost included in the self-constructed asset by Gambino Company is $60,000, which is the sum of the variable overhead directly related to construction ($25,000) and the allocated fixed overhead if it were normal production ($35,000).
Step-by-step explanation:
During the self-construction of an asset by Gambino Company, the costs incurred include both fixed and variable overhead. Fixed overhead for the year amounts to $1,210,000, and a portion of this amount, $35,000, represents the fixed overhead that would be allocated to the asset as if it were part of normal production. Additionally, there is variable overhead totaling $25,000 that is directly attributable to the self-construction of the asset. To determine the correct cost to be included in the self-constructed asset, we combine the variable overhead and the allocated portion of the fixed overhead.
The total amount of overhead that should be included in the cost of the self-constructed asset is, therefore, $60,000 (Option D), which is the sum of the variable overhead attributable to self-construction ($25,000) and the portion of the fixed overhead allocated to the asset if it were normal production ($35,000).