Alex Is on the Board of Directors of Computers Plus

question 7

Multiple Choice

Alex is on the board of directors of Computers Plus.Computers Plus is looking for a warehouse to purchase.Alex owns a warehouse.In order for Alex to sell his warehouse to Computers Plus:

• A) the transaction must be fair to both Alex and Computers Plus.
• B) the disinterested members of the board of directors may approve the transaction.
• C) he must resign his position on the board of directors of Computers Plus before any negotiations for the warehouse begin.
• D) a court must review the opportunity to determine its favorability.

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Definitions:

Facility-Level

Pertaining to costs and activities that are necessary for maintaining the overall operation of a plant or company, but not directly tied to individual products.

Underapplied Overhead

Represents the situation when the allocated factory overhead costs are less than the actual factory overhead costs incurred.

Predetermined Overhead Rates

A rate calculated before a period begins, used to estimate the manufacturing overhead costs that will be allocated to each unit of product.

Cost of Goods Sold

The total direct costs attributable to the production of the goods sold by a company, including material and labor costs.