Before Glenn Died, He Had an Option Contract with Jerome

question 72

Multiple Choice

Before Glenn died, he had an option contract with Jerome. The administrator of Glenn's estate ________

• A) must hold the offer open until it expires in accordance with the contract.
• B) is not obligated to hold the offer open to Jerome since Glenn died.
• C) can decide if he or she wants to keep the option contract with Jerome.
• D) must seek a court's permission to honor the option contract.
• E) the estate's heirs can decide to hold the option contract open.

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Definitions:

Absorption Costing

An approach in accounting that integrates all costs associated with manufacturing, including direct materials, direct labor, and both variable and fixed overhead, into the product’s price.

Net Operating Income

A company's revenue minus its operating expenses, not including taxes and interest charges, indicating the profitability of its core business activities.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as salaries of managers, depreciation of manufacturing equipment, and rent of the factory building.

Deferred in Inventories

A situation where costs incurred in acquiring or producing inventory are postponed from being recognized as expenses until the goods are sold.