An Ambiguous Contractual Term

question 36

Multiple Choice

An ambiguous contractual term

• A)always results in litigation.
• B)never results in litigation.
• C)will have more than one plausible meaning.
• D)will always have only one plausible meaning.
• E)will always have six possible meanings.

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Definitions:

Manufacturing Overhead

The indirect factory-related costs that are incurred when a product is manufactured including costs related to depreciation, utilities, and maintenance.

Plantwide Overhead Rate

A single overhead rate calculated by dividing total manufacturing overhead costs by the total measure of activity across the entire plant.

Manufacturing Overhead

All manufacturing costs that are not directly traceable to the product being produced, including costs related to indirect materials, indirect labor, and other indirect expenses.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities required to produce them, aiming for more accurate cost allocation.