If You Hire Gnowsky to Act as Your Agent, Which

question 102

Multiple Choice

If you hire Gnowsky to act as your agent, which of the following is true with regard to the duties he owes to you?

• A) Gnowsky need not use reasonable care, skill, and diligence in his service to you.
• B) Even when Gnowsky is acting as your agent, he need not put your interest above his own.
• C) An agent may delegate his authority without the authorization of his principal.
• D) His failure to obey you and to act within the authority given him would allow you to sue him for breach of contract.
• E) Gnowsky need not tell you everything relevant to his task that a reasonable person would consider might affect your decision making.

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Definitions:

Absorption Costing

An accounting method that includes all production costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Markup Percentage

The percentage added to the cost of goods to cover overhead and profit, calculated as markup divided by the cost of the goods.

Selling Price

The amount of money for which a product is sold to the customer; it may include costs such as manufacturing, distribution, and markup.

Traceable Fixed Expense

Fixed costs that can be directly linked to a specific product, department, or segment and would disappear if the product, department, or segment were eliminated.