Use the Information Below to Answer the Following Questions Other Relevant Information: Management Has Budgeted for 20,000 Direct Labour

question 15

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 webpage 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 is shown below: $$\begin{array} { l r } \text { Sales } & \$ 550,000 \\\text { Direct materials } & 50,000 \\\text { Direct labour } & 300,000 \\\text { Variable overhead } & 5,000 \\\text { Advertising for business } & 5,000 \\\text { Depreciation on equipment } & 30,000 \\\text { Administration } & 27,000 \\\text { Interest } & 10,000 \\\text { Profit before tax } & 133,000\end{array}$$ 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: $$\begin{array} { l r } \text { Direct materials } & \$ 400 \\\text { Direct labour (100 hours) } & \$ 1,500\end{array}$$
-Refer to the table above. The budgeted overhead recovery rate based on direct labour hours is:

• A)$3.85 per DLH.
• B)$5.60 per DLH.
• C)$2.85 per DLH.
• D)$5.85 per DLH.

---

Definitions:

Self-fulfilling Prophecy

A belief or expectation that an individual holds that comes true because he or she acts in ways that support or lead to its fulfilment.

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.

Stereotype

A fixed overgeneralized belief about a particular group or class of people.

Prejudice

Preconceived opinion not based on reason or actual experience, leading to biased, unfair attitudes and actions towards others.