Abba Accounting Expects Its Accountants to Work a Total of 24

question 91

Multiple Choice

Abba Accounting expects its accountants to work a total of 24 000 direct labour hours per year. Abba's estimated total indirect costs are $240 000. The direct labour rate is $75 per hour. If Abba does a job requiring 40 hours of direct labour, and bills the client using a standard markup of 40%, what will be the amount that Abba bills the client for?

• A)$4 760
• B)$3 700
• C)$4 200
• D)$3 400

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Definitions:

Overvalued

A term describing a security or asset priced higher than its true intrinsic value, often based on speculative demand rather than fundamentals.

Technology Bubble

A market condition characterized by the rapid inflation of technology stocks to unsustainable levels, often followed by a sharp decline.

All-Equity Firm

A company that is financed entirely by its shareholders without any debt.

Book Value

The net value of a company's assets minus its liabilities, often used to determine the company's equity value.