Answer the Following Questions Using the Information Below

question 68

Multiple Choice

Answer the following questions using the information below:
The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $10,000,000 bond issuance, the Electric Mixer Division used $7,000,000 and the Electric Lamp Division used $3,000,000 for expansion. Interest costs on the bond totaled $750,000 for the year.
-Which corporate costs should be allocated to divisions?

• A)fixed costs only
• B)variable costs only
• C)neither fixed nor variable costs
• D)both fixed and variable costs

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Definitions:

Requirements Contract

A contract in which one party agrees to purchase all of its required goods or services from the other party.

Exclusive Dealing Contracts

Agreements where a retailer or distributor is obligated to buy from only the contracted supplier, thereby limiting the retailer's ability to purchase from other vendors.

Sufficient Consideration

A vital element in contract law, referring to something of value exchanged between parties that is necessary to form a legally binding agreement.

UCC

Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States.