Metal Bashers Limited produces steel fabrications for the construction industry. Steel girders and supports are cut to size and welded in the welding department and then painted in the paint shop before proceeding to the finishing department. Details of the overheads incurred by the three production departments are given below along with information on the two additional departments, the canteen and the service department. The canteen is used by all the employees of Metal Bashers Limited but the canteen staff are too busy to make use of the canteen facilities themselves. The service department repairs and cleans the machinery used in the three production departments. External catering equipment maintenance contractors service the canteen equipment.

Metal Bashers Limited is currently quoting for Job No 12359 which will require £1,500 of direct material, £2,000 of direct labour and £500 of direct expenses. It is estimated that job 12359 will use 120 hours of labour in the welding department, 50 hours in the painting department and 25 hours in the finishing department. Overheads are absorbed into jobs on the basis of direct labour hours in each department. The selling price for jobs is the total production cost of each job plus 40% of cost.

Required

(a) Calculate overhead recovery rates for the welding, painting and finishing departments.

(b) Calculate the production cost and selling price of job 12359.

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Overheads Number of employees Percentage usage of service department Department labour hours Welding Painting Finishing Canteen Service £100,000 £75,000 £43,000 £60,000 £42,000 15 40% 30,000 5 30% 12,500 6 30% 10,000 2 4