Martin Wins a Car in a Lottery

question 66

Multiple Choice

Martin wins a car in a lottery.As he already owns a car, he decides to sell the new one to his friend Ted.While driving the car, Ted gets into a head-on collision with another car.Due to a defective Supplemental Restraint System (SRS) of the vehicle, the airbag does not deploy and Ted is seriously injured.Which of the following statements is true of this situation?

• A)Martin can be held strictly liable because he sold the car to Ted.
• B)The car manufacturer cannot be held strictly liable as Ted had not bought the car from them.
• C)Martin cannot be held strictly liable as the sale of the car counts as a casual transaction.
• D)The driver of the other car can be held strictly liable due to his or her involvement in the accident.

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Definitions:

Machine Hours

Machine hours refer to the total time that a machine is operated during a specific period, often used as a basis for allocating manufacturing overhead costs in cost accounting.

Units of Production

A method of depreciation that allocates the cost of an asset over its useful life based on the number of units it produces.

Departmental Overhead Rates

Specific overhead rates calculated for each department within a company, facilitating more accurate cost allocation.

Direct Labor Hours

The total number of working hours spent by employees directly involved in the production of goods or services.