Paul's Auto Repair Uses Time and Material Pricing Assuming There Is No Profit Markup on Material Cost, the Shop

question 4

Multiple Choice

Paul's Auto Repair uses time and material pricing. The body shop, which anticipates 10,000 direct labor hours of activity, has the following data: $\begin{array}{lr}\text { Annual overhead costs: }\\\text { Material handling and storage } & \$ 15,000 \\\text { Other overhead costs } & 75,000\\\text { Annual cost of materials used } & 187,500 \\\text { Labor rate per hour, including fringe benefits } & 18 \\\text { Hourly charge to achieve profit margin } & 11\end{array}$ 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 other answers are correct.

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