Bailey CoAnd Spryt Bros

question 40

Multiple Choice

Bailey Co.and Spryt Bros.enter into a contract for the manufacture and sale of 400 lawn chairs.If both parties agree that a modification is necessary,

• A)the surest way to modify the contract is to liquidate it.
• B)they may not do so without court supervision.
• C)an agreement to rescind the contract will terminate the contractual rights of Bailey Co.and Spryt Bros.if neither of them had completed their obligations.
• D)courts will generally not enforce a cancellation and modification of a contract unless one party received inadequate consideration under the original contract.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead involved in converting raw materials into finished products.

Weighted-Average Method

A cost accounting method that assigns an average cost to each unit of inventory by weighting the costs of similar items.

Work in Process Inventory

The cost of partially finished goods that are still in the production process at the end of an accounting period.

Units Completed

is a measure of the number of finished units produced within a given period, reflecting the productivity or output level.