A Firm's Warranty Costs Are $375,000 Per Year

question 94

Multiple Choice

A firm's warranty costs are $375,000 per year. A competitor's warranty costs are $175,000 per year. The value-added costs are

• A)$225,000.
• B)$75,000.
• C)$150,000.
• D)$0.

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Definitions:

Obligation

A legal or moral duty to do or refrain from doing something.

Statute of Frauds

a legal principle that requires certain types of contracts to be written and signed by the party being charged with the obligation to be enforceable.

One-Year Provision

A legal principle that requires certain contracts, such as those that cannot be fulfilled within one year, to be in writing to be enforceable.

Contract Comes into Existence

The point at which an agreement between two or more parties is legally enforceable, usually triggered by an offer, acceptance, and adequate consideration.