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Joe Sold Harry His Barbershop, but Harry Wanted a Commitment

question 76

Essay

Joe sold Harry his barbershop, but Harry wanted a commitment on Joe's part that he would not open up another barbershop in the area after he got the money. Explain how the parties could include a clause in their agreement to that end without it being void as a restraint of trade.


Definitions:

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, computed by assessing the work done as a fraction of the completed goods.

First-In, First-Out Method

An inventory valuation method that assumes the first items placed in inventory are the first sold; useful in managing and valuing inventory.

Conversion Costs

The combined costs of direct labor and manufacturing overheads required to convert raw materials into finished goods.

Equivalent Units

A concept in cost accounting used to calculate the cost of partially completed goods by converting them into a number of fully completed units.

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