If the Delivery Terms Are Not Specified in a Contract

question 327

True/False

If the delivery terms are not specified in a contract, it must be "reasonable" which is determined by industry custom and intent of the parties.

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Definitions:

Production Costs

Expenses directly related to the creation of goods and services, including materials, labor, and overhead costs.

Fixed Production Costs

Costs that do not change with the level of production, such as rent, insurance, and salaries.

Variable Production Costs

Costs that change in proportion to the level of production activity, such as raw materials and direct labor.

Variable Costing

A costing method that includes only variable production costs in the cost of goods sold and treats fixed overhead as a period expense.