Use the Following Information to Answer the Following Questions

question 65

Multiple Choice

Use the following information to answer the following Questions
Ralph’s Auto Repair uses time and material pricing. The body shop, which anticipates 10,000 direct labor hours of activity, has the following data:


-Assuming there is no profit markup on material cost, the amount to be added to each dollar of material cost to obtain the total material charge is:

• A) $0.06.
• B) $0.08.
• C) $0.10.
• D) $0.13.
• E) None of the answers is correct.

---

Definitions:

Fixed Expenses

Costs that do not fluctuate with the level of production or sales, remaining constant even when business activity levels change.

Rural Sales Territory

A geographic area located in the countryside where a company's sales representatives focus their marketing and sales efforts.

Net Operating Income

The profit generated from a company's everyday business operations, excluding taxes and interest.

Absorption Costing

A strategy in accounting where the cost of a product encompasses all the production expenses: direct materials, direct labor, and manufacturing overheads, regardless of them being fixed or variable.