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

question 19

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. If the budgeted direct labour hours change to 25,000 hours, what will be the revised quote?

Definitions:

Proprietorship

A business entity owned and operated by a single individual, with no distinction between the business and the owner.

Personal Liability

The responsibility of individuals to repay debt or fulfill obligations from their own assets, distinct from corporate or shared liabilities.

Limited Liability

A legal structure where a company's owners are protected from personal responsibility for its debts or liabilities beyond their investment in the company.

Stakeholder Theory

A concept in organizational management and business ethics that emphasizes the importance of considering the interests of all parties affected by business activities, not just shareholders.