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

question 32

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 direct costs for the year are:

• A)$350,000.
• B)$340,000.
• C)$375,000.
• D)$300,000.

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Definitions:

Lump-Sum Tax

A tax that is of a fixed amount and does not vary with the taxpayer’s income level or asset value.

Consumption Tax

A levy imposed on the acquisition of goods and services, charged at the time of purchase.

Income Tax

A charge imposed by authorities on the earnings of individuals and enterprises operating within their territory.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating how much of an additional dollar earned will be taken in taxes.