Fact Pattern 17-1

question 26

Multiple Choice

Fact Pattern 17-1
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order.
-Refer to Fact Pattern 17-1.Capital Bank pays the check.Capital

• A)can sue Echo for a wrongful stop-payment order.
• B)can sue Fix-It for breach of contract.
• C)can sue no one because it paid a check that was not properly payable.
• D)is liable for Echo's loss due to the wrongful payment.

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Definitions:

Direct Labor-hours

Direct labor-hours are the total hours worked by employees directly involved in the manufacturing process, used as a measure for allocating labor costs to products.

Predetermined Overhead Rate

The rate estimated at the beginning of a period to allocate overhead to products or job orders, calculated based on expected overhead costs and an allocation base.

Machine-hours

A measure of production activity that quantifies the total hours that machinery is in operation during a given period.

Manufacturing Overhead

All indirect costs related to the manufacturing process, including materials, labor, and expenses not directly tied to the production of goods.