Julian Decides That He Would Like the House Being Built

question 30

True/False

Julian decides that he would like the house being built for him, under contract with Porter Developers, to have a blue tile roof instead of a red tile roof. The two kinds of tile are equally available and are the same price, and no roofing of the house has yet been done. Porter alleges that this is a material alteration of the terms of the contract, since the roof is one-tenth of the value of the house, and that, therefore, it cannot be done without their agreement to the change, which they will only give for a further payment of $5,000. They are right.

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Definitions:

Aging Schedule

A tabulation of accounts receivable broken down by age, typically in 30-day increments, to assess the collectibility of the receivables.

Cash Discount

A reduction in the price of goods or services offered by the seller to the buyer for prompt payment.

Credit Cost Curve

Illustrates the relationship between the cost of credit (interest rates) and the amount of credit available in the market.

Carrying Cost Curve

A graphical representation showing the total cost of holding inventory over time.