Final answer:
In most service firms, 'direct materials'(a) is the cost that is usually immaterial because these firms tend to offer intangible services, where costs are tied more to 'direct labor' and 'service overhead'.
Step-by-step explanation:
The cost that is usually immaterial in most service firms is (a)direct materials. Service firms typically do not have significant costs related to materials because their business model is based on providing intangible services rather than producing tangible products. For instance, service firms such as those providing legal advice, accounting services or IT support, incur costs primarily associated with labor and overhead.
The variable costs in service firms are largely tied to direct labor, as services often require skilled professionals to carry out the tasks at hand. Producing a greater quantity of a service typically requires more workers or more working hours.
Service overhead, also known as fixed costs, may include costs like rent for the office space, utilities, or equipment that is used on a regular basis. These costs do not fluctuate directly with the volume of services provided. On the other hand, direct materials that would be used in a manufacturing process are often insignificant for service firms as they do not ordinarily require substantial amounts of physical materials to provide their services.