Don Has an Employment Contract with Dunkirk Ice Cream

question 16

Multiple Choice

Don has an employment contract with Dunkirk Ice Cream.He sells ice cream and novelty ice cream products.He has nine children and doesn't make enough money,so he decides to see if another dairy will hire him,too."After all," he reasons,"most stores carry four or five different brands." His employment contract prohibits him from competing.If Don sells for another dairy in addition to Dunkirk,will he be in trouble under his contract?

• A) No,it is unenforceable as against public policy.
• B) Yes,it is likely to be enforceable during employment.
• C) No,the prohibition against competing is enforceable only after he quits Dunkirk.
• D) A court would have to rule on the enforceability of the covenant not to compete since courts are reluctant to enforce such covenants during a period of employment.

---

Definitions:

Fixed Manufacturing Overhead

The costs that do not vary with the level of production or sales, such as salaries of managers, rent of the factory, and depreciation of manufacturing equipment.

Predetermined Overhead Rate

A pre-determined rate utilized for attributing manufacturing overhead costs to products or job orders, which is established beforehand based on anticipated expenses and levels of activity.

Variable Manufacturing Overhead

consists of production costs that fluctuate with the level of output, such as utilities or materials used in the maintenance of equipment.

Fixed Manufacturing Overhead

Indirect manufacturing costs that do not vary with production volume, such as salaries of managers, rent, and utility expenses.