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

question 14

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. Total budgeted indirect costs for the year are:

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

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Definitions:

Wages and Prices

The relationship between the payment workers receive for their labor and the cost of goods or services in the economy.

Rational Expectations Theory

The hypothesis that individuals form forecasts about the future based on all available information and past experiences, affecting their economic decisions.

Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period.

Government Intervention

The direct or indirect involvement of governmental actions in the market to influence the economy, correct market failures, or protect the public interest.