An Agreement Is Not Binding When

question 33

Multiple Choice

An agreement is not binding when:

• A) one party makes a mistake regarding a material fact.
• B) both parties make a mistake regarding a material fact.
• C) one party makes a mistake of law.
• D) all of the above.

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Definitions:

Predetermined Overhead Rate

Calculated before the period begins, this rate is used to assign overhead costs to products or job orders based on an activity base.

Variable Manufacturing Overhead

Costs that fluctuate with the level of production output, such as raw materials and direct labor.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to products.

Manufacturing Overhead

All indirect costs associated with manufacturing, excluding direct material and direct labor costs, such as utilities and rent for the manufacturing space.