Bill Orders a Custom-Made Suit from Rooks to Be Delivered

question 16

Multiple Choice

Bill orders a custom-made suit from Rooks to be delivered by Friday at 5 p.m. When the suit is delivered to his office on Friday afternoon, he is in conference with a client. He accepts delivery and hangs the suit in his closet. When Bill tries on the suit Saturday evening, he discovers that the pants are cuffed. He had ordered cuffless trousers. What can he do?

• A) He cannot revoke acceptance since the cuffs are not difficult to discover.
• B) He can revoke acceptance if the cuffs substantially impair the value of the goods to him and Rooks will not remove the cuffs.
• C) He can reject the goods since he had not yet accepted them prior to inspection.
• D) He cannot reject the goods because the cuffs are curable.

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Definitions:

Direct Materials Costs

The costs of raw materials that are directly involved in the manufacture of a product and can be directly traced to the product.

Fixed Overhead Costs

Expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Budgeted Manufacturing Cost

The projected costs involved in producing goods over a specific period, including labor, materials, and overhead expenses.

Flexible Budget Report

A financial report that compares actual results to a budget adjusted for the actual level of activity or volume of work performed.