Gareth Recently Graduated with the Highest GPA of Any Student

question 68

True/False

Gareth recently graduated with the highest GPA of any student in Business.He has been hired by a prestigious bank in London, but that job will not start for three months.To fill the time and to make a little extra money, Gareth posted an advertisement around campus: "Top Flight Tutorials-Learn from the Best-$100 Per Hour-Minimum of Ten Sessions." Reva is a struggling student in the first year of the Business program.Desperate to improve her grades, she signed a contract with Gareth and paid $1000 for ten tutorials.That agreement, which Gareth personally drafted, expressly states: "This agreement is subject to the usual rules regarding assignments." After the first tutorial, Reva was delighted with Gareth's services.She found him extraordinarily arrogant, but also very smart.For the second tutorial, however, she was surprised when Evan, a mediocre second-year student, showed up instead of Gareth.As Evan explained, Gareth decided that he wanted to travel, rather than deliver tutorials, in the time before his bank job started.Gareth therefore assigned his role under the contract to Evan.Reva has no basis for complaint because she expressly agreed to abide by the general law of assignments.

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Definitions:

Labor Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost, used to measure the efficiency and cost management in labor use.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain amount of output, multiplied by the standard labor rate.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected overhead based on standard rates.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost allotted for the actual production achieved, indicating the efficiency of utilizing variable resources.