Table 5-7 Shows a Mechanic's Hourly Wage and the Respective

question 62

Multiple Choice

Table 5-7 shows a mechanic's hourly wage and the respective price indexes for the years 1975 and 2005. Use the table to answer questions .
Table 5-7

-Refer to Table 5-7. Calculate a mechanic's real wage in 2005.

• A) $26.25
• B) $40
• C) $70
• D) $100.80

---

Definitions:

First-In, First-Out

An inventory valuation method that assumes that the first items placed in inventory are the first items sold, ideal for products that are perishable or have a short shelf life.

Predetermined Overhead Rate

A rate calculated before a period begins, based on the estimated overhead costs and estimated activity base, used to allocate overhead costs to products or services.

Direct Labor Costs

Expenses attributed to the payment of employees directly involved in the production of goods or services.

Machine Hours

A measure of the amount of time a machine is operated, used in allocating manufacturing overhead costs.