Deb and Erv Are Partners in Framing & Foundations, a Construction

question 15

Multiple Choice

Deb and Erv are partners in Framing & Foundations, a construction outfit. Deb manages the business. For this service, she is

• A) entitled to pay in proportion to her effect on the business if the partners agree.
• B) entitled to pay in proportion to her effort by default.
• C) entitled to pay in proportion to her capital contribution.
• D) not entitled to pay.

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Definitions:

Capacity

The maximum output a system can produce over a given period of time. It's crucial for planning and efficiency improvement.

Machine-Hours

A measure of production time or capacity based on the number of hours machines are in operation.

Unused Capacity

The available production or service capability that is not being utilized by a business.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to individual jobs or products based on a certain activity base, such as machine hours or labor hours.