A Minor,unable to Live at Home,contracts to Rent an Apartment

question 5

Multiple Choice

A minor,unable to live at home,contracts to rent an apartment for one year at $800 per month.After living there for three months,he disaffirms the contract.The reasonable value of that apartment was only $700 per month.Assuming no rent has been paid,the minor must pay:

• A) nothing, because the contract has been disaffirmed.
• B) $2,400, which is the contract rate for three months.
• C) $2,100, which is the reasonable value for three months.
• D) $9,600, which is the contract rate for the one-year lease term.
• E) $8,400, which is the reasonable rate for the one-year lease term.

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Definitions:

Capacity Analysis

The process of determining the maximum level of output a company or production facility can achieve within a given period, considering limitations such as equipment and labor.

Time-Driven Activity-Based Costing

A refinement of activity-based costing that assigns costs based on the actual duration activities take, using predetermined time estimates.

Customer Service Department

A division of a business that handles queries, supports customers with problems or complaints, and provides information about products or services.

Customer Cost Analysis

A process of determining the total cost incurred by a business to serve a customer, including all direct and indirect expenses.