Use the Information Below to Answer the Following Questions

question 20

Multiple Choice

Use the information below to answer the following questions.
Fingers Ltd, a graphic design service, has received an inquiry from a potential customer for a quotation for a web-page design. The pricing policy of the business is based on the budgeted financial data for the coming financial year. The data for the coming year are shown below: Other relevant information:
Management has budgeted for 20,000 direct labour hours. Overhead is applied based on direct labour hours. An estimate for the direct costs of the job to be quoted on is shown below:
Direct materials $400
Direct labour (100 hours) $1,500
-Refer to the table above. Total budgeted indirect costs for the year are:

• A) $117,000
• B) $77,000
• C) $57,000
• D) $72,000

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Definitions:

Compensation Contracts

Agreements specifying the terms of pay and benefits for an employee or executive, which may include salary, bonuses, stock options, and other forms of compensation.

Accounting Standards Codification

The collection and organization of the authoritative accounting and reporting standards for U.S. GAAP (Generally Accepted Accounting Principles).

GAAP

Generally Accepted Accounting Principles; a collection of commonly followed accounting rules and standards for financial reporting in the United States.

FASB

The Financial Accounting Standards Board, which is responsible for establishing and improving standards of financial accounting and reporting for the private sector in the United States.