Chris Contracts to Buy David's House on Condition That Small

question 2

Multiple Choice

Chris contracts to buy David's house on condition that Small Town Bank approves Chris's application for a mortgage loan by July 1.If Chris is not approved for the loan,then:

• A)he still has a duty to buy the house.
• B)he is discharged from further obligation under the contract.
• C)his inability to get the loan constitutes a breach of contract.
• D)he must renegotiate with David.

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Definitions:

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities, improving the accuracy of product and service pricing.

Idle Capacity

Unused production capability or facilities that could be used to produce more goods but are not currently being utilized due to lack of demand or efficiency.

Plantwide Overhead Rate

A single overhead rate calculated by dividing total manufacturing overhead costs by the total allocation base for the entire plant.

Activity-based Costing

A method in accounting that identifies the activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.