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

question 37

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 recommended quote for the job is:

• A)$2,285.
• B)$2,460.
• C)$2,195.
• D)$2,485.

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Definitions:

Fair Value

An estimate of the market value of an asset or liability based on current conditions and willing buyer and seller dynamics, often used for financial reporting purposes.

Salary Allowance

This term refers to a fixed amount or stipend that is given in addition to salary, often for the purpose of covering specific expenses.

Average Capital Investment

The mean amount of money invested in assets over a certain period, calculated to evaluate investments' performance or compare investment opportunities.

Capital Balances

The amount of money that shareholders have invested in a company, not including retained earnings or profits.