A large city currently provides free water service to residents. The marginal social cost of making a gallon of water available per month is estimated to be 5 cents no matter how much water is used. Currently, city residents consume 500,000 gallons of water per month. The costs of making the water available are financed by a local tax on city residents. Required:
a. Draw a graph to show that the current monthly consumption of water is not efficient.
b. Show the net gains in well-being possible by applying a user charge of 5 cents per gallon to residential users. Assume that monthly consumption declines to 400,000 gallons after the user charge is imposed. Calculate the tax revenues that can be freed for other uses each month (including a reduction in taxes to local residents) after the user charge is imposed.

The direct labor budget of yuvwell corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours: 1st quarter 2nd quarter 3rd quarter 4th quarterbudgeted direct labor-hours 11,200 9,800 10,100 10,900the company uses direct labor-hours as its overhead allocation base. the variable portion of its predetermined manufacturing overhead rate is $6.00 per direct labor-hour and its total fixed manufacturing overhead is $80,000 per quarter. the only noncash item included in fixed manufacturing overhead is depreciation, which is $20,000 per quarter.required: 1. prepare the company’s manufacturing overhead budget for the upcoming fiscal year.2. compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.