Question
A modern painting business has received an inquiry from a potential customer for a painting. The pricing policy of the business is based on the
A modern painting business has received an inquiry from a potential customer for a painting. The pricing policy of the business is based on the budgeted financial data for the coming year. The data for the coming year is shown below:
Sales $550,000
Direct materials 50,000
Direct labour 300,000
Variable overhead 5,000
Advertising for business 5,000
Depreciation on equipment 30,000
Other fixed overhead costs 37,000
Profit before tax 133,000
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:
Direct materials $400
Direct labour (100 hours) $1,500
The recommended quote for the job is:
Select one:
a. $2,195
b. $2,285
c. $2,460
d. $2,485
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