Fact Pattern 11-3 (Questions 10-11 Apply)

question 58

Multiple Choice

Fact Pattern 11-3 (Questions 10-11 apply)
Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury.
-Refer to Fact Pattern 11-3.The agreement between Dex and Carmen is

• A) a covenant not to sue.
• B) an accord and satisfaction.
• C) a release.
• D) promissory estoppel.

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Definitions:

Indirect Costs

Expenses not directly tied to a specific product or service, such as overheads, that are necessary for running a business.

Variable Costs

Costs that change in proportion to the level of production or sales activity, such as raw materials and direct labor.

Manufacturing Overhead

All indirect costs associated with the production of goods, such as utilities, maintenance, and manager salaries.

Committed Fixed Costs

Investments in facilities, equipment, and basic organizational structure that can’t be significantly reduced even for short periods of time without making fundamental changes.