Which of the following is/are not true regarding pricing for service firms?
A) A service firm must establish a price based on the materials used to provide the service, the labor employed, an allowance for overhead, and a profit.
B) Most service firms base their prices on an hourly rate (usually actual hours), but sometimes standard hours are used.
C) For most service firms, labor and profit comprise the largest portion of the cost of the service.
D) None of the above
C
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Which of the following is the last step in developing an activity-based costing system?
A) estimating the total quantity of the cost driver B) estimating the total indirect costs of each activity C) identifying the activities D) allocating indirect costs to the cost object
Harry just bought a new four-wheel-drive Jeep Cherokee for his lumber business. The price of the vehicle was $35,000, of which he made a $5,000 down payment and took out an amortized loan for the rest
His local bank made the loan at 12% interest for five years. He is to pay back the principal and interest in five equal annual installments beginning one year from now. Determine the amount of Harry's annual payment. A) $8,322 B) $9,600 C) $9,709 D) $6,720