A Promise Lacks Consideration If a Person Promises to Perform

question 25

Multiple Choice

A promise lacks consideration if a person promises to perform an act or do something he or she is already under an obligation to do. This is called a(n) ________.

• A) illegal consideration
• B) preexisting duty
• C) gift promise
• D) illusory promise

Understand the concept and implications of transfer pricing within a company.

Grasp the significance of setting transfer prices and the approaches used.

Understand and identify the differences between investment centers and profit centers.

Calculate investment turnover and understand its implications.

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Definitions:

Unit Product Cost

The total cost associated with producing one unit of a product, including direct materials, direct labor, and allocated overhead.

Net Operating Income

A business's income after deducting operating costs, not including taxes or interest.

Break-even Points

The level of sales at which total revenues equal total costs, resulting in no profit or loss.

Break-even Sales

Break-even sales represent the amount of revenue needed to cover all fixed and variable costs, indicating the point at which a business neither makes a profit nor incurs a loss.