John Buys a Machine for $10,000 Under a Contract That

question 63

Multiple Choice

John buys a machine for $10,000 under a contract that excludes consequential damages and limits the buyer's remedies to repair and replacement of defective parts.John later discovers that the machine is not working properly.Under these circumstances if the remedy of limitation is enforceable,then,to what extent will John be successful?

• A) John can recover $10,000.
• B) John will have to pay an additional amount for any repairing done.
• C) John is entitled to any damages since he did not check the machine on purchase.
• D) John can only get the machined replaced or repaired by the seller.

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Definitions:

Variable Overhead

Costs that fluctuate with the level of production output, including indirect expenses like power and materials needed for maintenance and operations.

Direct Labor-hours

The total number of hours worked by employees directly involved in the production of goods or services.

Variable Overhead Rate Variance

It is the difference between the actual variable overhead based on costs like utilities or materials and the standard cost that was expected.

Budgeted Production

Budgeted production refers to the anticipated quantity of products a company plans to produce in a specified period, based on forecasting.