The Rumsea Production Company has annual production overheads of £1,000,000 and 50,000 direct labour hours per annum are worked, made up as follows:

a Calculate, for the factory as a whole, the overhead recovery rates as a percentage of direct labour.
b The production overheads for each department are as follows:

Calculate the overhead recovery rate as a percentage of direct labour for each department.
c A new product, the Rumbo, will require 10 hours of machining, 4 hours of assembly and 4 hours of finishing. How much production overhead should be charged? Explain and justify your calculations.

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Machining operatives 10,000 hours at 20 per hour Assembly operatives 25,000 hours at 10 per hour Finishing operatives 15,000 hours at 15 per hour