Cost and price statement

2014 - Dec [1] (a) Premiere Manutacturer Ltd, received an enquiry for 250,000 numbers of special type of machine parts. Capacity of the company exists for manufacturing the parts, but a fixed investment of 95,000 and working capital to the extent of 35% of Sales value will be required to undertake the job. The cost estimates are as follows: Raw materials 40,000 kg at 3.00 per kg. Labour hours 12,000 of which 800 would be overtime payable at double the normal rate. Labour rate : 3.00 per hour Factory overhead 2.50 per direct labour hour. Selling and distribution overhead expenses 45,400 Material recovered at the end of operation will be 12,000 (estimated) The company expects a net return of 15% on capital employed