Before Giving a Listing to a Broker, the Owner Informed

question 9

Multiple Choice

Before giving a listing to a broker, the owner informed the broker that the roof was in bad shape. The broker later showed the house and assured the buyer that the house was in excellent condition, without any known problems. After the first rain, the house suffered heavy water damage due to a leaky roof. The buyer is angry and will probably sue the:

• A) broker and the seller
• B) broker
• C) broker, seller, and escrow company
• D) title insurance company

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Definitions:

Variable Cost of Goods Sold

These are costs that fluctuate in direct proportion to changes in the level of production or sales volume, such as raw materials and direct labor.

Fixed Cost of Goods Sold

A portion of the cost of goods sold that remains constant, regardless of the level of production or sales.

Contribution Margin Format

A costing format that highlights the contribution margin, which is sales revenue minus variable costs, used in management accounting.

CVP Income Statement

A managerial accounting financial statement that utilizes cost-volume-profit analysis to show the effects of changes in cost and volume on a company's profits.