Ken Entered into a Contract with Chris to Haul Gravel

question 42

True/False

Ken entered into a contract with Chris to haul gravel into his large tandem truck from Chris's gravel pit to a building site some three miles away distant, at $60 per load. Before Ken was to begin performance, his truck was destroyed in a serious traffic accident. Ken need not perform the contract as the contract was frustrated by the destruction of the truck.

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Definitions:

Machine Hours

A measure of the amount of time machines are operated in the production process, commonly used as an allocation base for assigning overhead costs.

Indirect Labor

Labor costs attributed to anything other than the direct manufacturing of goods or provision of services, such as maintenance, supervision, and administrative tasks.

Factory Utilities

Expenses incurred for electricity, gas, water, and sewage services used in the operation of a manufacturing plant or factory.

Plantwide Overhead Rate

A single rate used to allocate manufacturing overhead costs to all units produced, regardless of the department in which they were made.