Fact Pattern 13-3​ Sal Contracts with Tasty Pizza to Deliver Its Products. Both

question 10

Multiple Choice

Fact Pattern 13-3​
Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
-Refer to Fact Pattern 13-3. The next day, Sal changes his mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sal and Tasty

• A) ​may agree to a new contract, but it cannot include a new price.
• B) ​may agree to a new contract that includes the new price.
• C) ​must perform their original contract.
• D) ​must perform the part of their original contract that is executory.

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Definitions:

Predetermined Overhead Rate

A rate calculated before the accounting period begins, based on the estimated overhead costs and estimated activity level, used to allocate overhead costs to products or services.

Labor-Hours

A measure of the work performed by employees, typically represented by the number of hours worked.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that vary with the level of production output.

Fixed Manufacturing Overhead

Consistent costs incurred during the manufacturing process that do not change with the amount of production, like factory rent and salaries of permanent staff.