The following information is available for the current year for Sven's Brokerage Services: $\begin{array}{lr}
\text { Sales } & £ 661,000 \
\text { Beginning work in progress } & 7,000 \
\text { Ending work in progress } & 6,000 \
\text { Direct labour } & 100,000 \
\text { Direct materials } & 30,000 \
\text { Overhead } & 150,000 \
\text { Selling expenses } & 80,000 \
\text { Administrative expenses } & 120,000
\end{array}$ What is Sven's income before taxes for the year?
A)£180,000
B)£182,000
C)£380,000
D)£382,000

Question

Quizplus · Accepted Answer

To calculate income before taxes, subtract total expenses from sales. Total expenses include direct labor, direct materials, overhead, selling expenses, and administrative expenses. Work in progress is not included in this calculation. Thus, income before taxes = £661,000 - (£100,000 + £30,000 + £150,000 + £80,000 + £120,000) = £661,000 - £480,000 = £181,000. However, the closest option is £180,000.

The Following Information Is Available for the Current Year for Sven's