The Choices Below Depict Five Costs of Garfield Industries and a Possible

question 88

Multiple Choice

The choices below depict five costs of Garfield Industries and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?

• A) Gasoline consumed; number of miles driven.
• B) Manufacturing overhead incurred in a heavily automated facility; direct labor hours.
• C) Sales commissions; gross sales revenue.
• D) Building maintenance cost; building square footage.
• E) Human resources department cost; number of employees.

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Definitions:

Periodic Tenancy

A leasing agreement that continues for successive periods (such as month-to-month or year-to-year) until either the tenant or landlord gives notice to terminate.

Tenancy at Will

A rental agreement that either party can terminate at any time without cause, provided proper notice is given.

Implied Warranty

An unwritten and unexpressed guarantee that a product or service complies with the standard quality and performance expected.

Habitability

The suitability of a building for living in, ensuring that it is safe, healthy, and fit for habitation.