Reference - Lottery Winnings

question 54

Multiple Choice

Reference - Lottery Winnings. Frank, a hypochondriac who was also very compulsive, was having minor surgery to repair a bone spur on his foot. He had just purchased a lottery ticket for a chance at the grand prize of $30,000,000. Frank's girlfriend, Bubbles, went with him to the hospital. While in the waiting room, Frank said to her, "Bubbles, I may not make it out of this bone spur surgery. Take my lottery ticket. If I don't make it, I hope you win and live it up, but please don't get another boyfriend." Bubbles replied, "I could never be happy without you." A nurse saw and heard the whole exchange. Frank came out of the surgery just fine but with a sore foot. While he was recuperating, that evening, Bubbles watched the lottery drawing and discovered that Frank's ticket was indeed the winning ticket. She immediately moved out and collected the winnings. Frank saw her on television with her new boyfriend, George. She appeared to be very happy. He checked the numbers and discovered that she won off of his ticket. Frank says that the lottery money is his. Which of the following is true regarding Frank's statement at the hospital regarding Bubbles taking the ticket?

• A) At that point he made a valid gift that could not be revoked.
• B) He did not make a gift because he placed a condition on it.
• C) He made an irrevocable gift at that time only if Bubbles never had another boyfriend; otherwise, she had to give the ticket and any resulting cash to Frank.
• D) He made an irrevocable gift at that time if Bubbles refrained from having another boyfriend until she cashed the ticket; and, after the ticket was converted, the condition no longer applied.
• E) None of these.

Understand the advantages and disadvantages of volume-based allocation methods versus activity-based costing.

Comprehend how overhead allocation impacts product costing and business decision-making.

Recognize the role of cost objects in different overhead rate methods.

Understand the concept of cost pools and how they are used in overhead allocation.

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Definitions:

Critical Value

A point on the scale of a test statistic that represents the threshold of significance, beyond which a null hypothesis is rejected.

Population Parameter

A numerical value that summarizes or describes an aspect of a population.

Null Hypothesis

A default statement that there is no difference or effect, used as a starting point for statistical hypothesis testing.

Probability

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.