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Canadian Farm Machinery Ltd

question 12

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Canadian Farm Machinery Ltd. entered into a contract with High Seas Transportation, which set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce Inc. Argentine has not yet paid for the tractors. If this contract, along with any other required documents, and a sight draft are sent to Argentine Produce's bank, the bill of lading will not be released to Argentine Produce until it pays Canadian Farm Machinery, thus protecting Canadian Farm Machinery's ownership rights if Argentine does not pay.


Definitions:

Revenues

The total amount of income generated by the sale of goods or services related to the company's primary operations.

Expenses

Costs incurred in the process of earning revenue; typically classified as fixed, variable, or periodic expenditures.

Breakeven Point

The point at which total cost and total revenue are equal, resulting in no net loss or gain for a business or project.

Variable Costs

Costs that change in proportion to the level of production or activity within a business, such as materials and labor costs.

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