Warren and Spencer Are Partners in a Drilling Operation

question 65

Essay

Warren and Spencer are partners in a drilling operation.Warren purchased a drilling rig to be used in the partnership's operations.Is this purchase binding on Spencer even though he was not involved in it? Explain your answer.

Recognize the significance of keeping in mind the assumptions and predictions upon which a budget is based.

Identify the responsibilities of the person managing the budget process.

Calculate inventory purchasing requirements based on sales forecasts and inventory levels.

Understand the different types of budgets within an organization (overhead, cash, etc.).

---

Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced over a short period.

Space Rental

The act of obtaining the use of a physical location or property for a specified period of time in exchange for payment.

Raw Material Cost

The expenditure incurred for the raw ingredients or basic materials that are converted through manufacturing processes into goods or services.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.