Exhibit 7-6 -In Exhibit 7-6, Which Costs Are Fixed Costs

question 19

Multiple Choice

Exhibit 7-6

-In Exhibit 7-6, which costs are fixed costs?

• A) rent, labor costs, and material costs
• B) rent and labor costs
• C) rent and material costs
• D) labor and material costs
• E) rent only

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Definitions:

Implied Warranty

An unwritten guarantee that the product sold meets certain criteria for usability and satisfaction.

Merchantability

A warranty, often implied by law, that goods sold are fit for the general purpose for which they are sold.

Fitness for a Particular Purpose

A legal warranty implying that a sold good is suitable for the specific use intended by the buyer, as made known to the seller at the time of purchase.

Comparative Fault

A legal doctrine that reduces the amount of damages a plaintiff can recover in a negligence-based lawsuit, based on the degree to which the plaintiff's own negligence contributed to the harm.