The Code Provides an Exception to the Executory Promise Rule

question 30

Multiple Choice

The Code provides an exception to the executory promise rule in:

• A) the giving of a negotiable instrument.
• B) the making of an irrevocable obligation to a third party.
• C) the lack of notice.
• D) Both the giving of a negotiable instrument  and the making of an irrevocable obligation to a third party  are correct.

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Definitions:

Underapplied Overhead

A situation where the allocated manufacturing overhead cost is less than the actual overhead cost incurred.

Direct Materials Cost

The cost associated with the raw materials that are directly used in the production of a product.

Direct Labor

Workers actively engaged in manufacturing products or providing services, whose labor directly contributes to output.

Finished Goods

Products that have completed the manufacturing process but have not yet been sold or distributed to the end customer.