A Company Placing an Order from the Lab Safety Supply

question 203

Multiple Choice

A company placing an order from the Lab Safety Supply catalog is instructed to add $25.00 to the total cost of the order to pay for shipping regardless of the buyer's location.Which method of shipping does this catalog supplier use?

• A)FOB origin pricing
• B)multiple-zone pricing
• C)freight absorption pricing
• D)single-zone pricing
• E)basing-point pricing

---

Definitions:

Variable Cost

A cost that varies in direct proportion to changes in the level of production or sales volume.

Cost Driver

A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.

Indirect Materials

Small items of material such as glue and nails that may be an integral part of a finished product, but whose costs cannot be easily or conveniently traced to it.

Machine Hours

A measure of the total time that production equipment is operational, used to allocate machine-related expenses to products.