Fun Toyz Corporation Makes Skateboards, Which It Sells to Con?sumers

question 3

Multiple Choice

Fun Toyz Corporation makes skateboards, which it sells to con?sumers, including Holly and Ira. Due to a defect, Holly is injured while using her new board. Ira's board has the same defect, but he is not injured. In a product liability suit based on strict product liabil?ity, Fun Toyz may be liable to

• A) Holly and Ira.
• B) Holly only.
• C) Ira only.
• D) no one.

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Definitions:

Underapplied

Describes the situation where the allocated manufacturing overhead is less than the actual manufacturing overhead incurred.

Overapplied

A situation in which the allocated manufacturing overhead cost is more than the actual overhead cost incurred.

Overapplied Manufacturing Overhead

Occurs when the amount of overhead applied to products or jobs during a period is greater than the actual overhead costs incurred.

Finished Goods Inventory

The value of a company’s inventory of products that are completed and ready for sale.