Use the 'N' bit its diameter is .3020 mm a 5/16" bit has a diameter of .3125 mm. It's a small difference but some SAE bit manufacturers don't have good quality control and can some times be even larger than the nominal .3125 mm causing a loose fit.
From personal experience drill an extra 1/8" for a total depth of 1/2" if you can, to take into account the insert seating and flange spreading.
Answered on 11/7/2012
Aaron/IL from Villa Park, IL