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

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.