Wing Company Makes a Special Kind of Racing Tire

question 73

True/False

Wing Company makes a special kind of racing tire.Variable costs are $340,and fixed costs are $35,500 per month.Wing sells 620 units per month at a sales price of $400.If Wing upgrades the quality of the tire,management believes that the sales price can be increased to $450.If so,the variable cost will increase to $370,and the fixed costs will rise by 30%.The CEO wishes to increase his operating income by 20%.If the company decides to upgrade the product,the CEO will reach his goal.

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Definitions:

Consideration

In contract law, a basic requirement for an enforceable agreement under traditional contract principles, defined in this text as legal value, bargained for and given in exchange for an act or promise. In corporation law, cash or property contributed to a corporation in exchange for shares, or a promise to contribute such cash or property.

Capacity

The ability to incur legal obligations and acquire legal rights.

Offer

A proposal by one person to another that is intended to create legal relations on acceptance by the person to whom it is made.

Void Contract

A contract that has no legal force or effect and cannot be enforced by either party.