A Chair Manufacturer Makes Custom Chairs Using Hand Tools,wood,glue,and Varnish

question 8

Multiple Choice

A chair manufacturer makes custom chairs using hand tools,wood,glue,and varnish.Which of the following statements is true?

• A) The costs of wood and glue would be treated as direct costs.
• B) Wood, glue, and varnish would all be direct materials.
• C) Wood would be accounted for as a direct cost, and glue and varnish as indirect costs.
• D) The concepts of direct and indirect costs are not applicable here.

---

Definitions:

Cure the Deficiency

To rectify or resolve a shortfall, error, or omission in a legal document or procedure.

Statutorily Established Liquidated Damages

Damages specified by law for certain breaches of contract, where actual damages are difficult to ascertain.

Firm Offer

A binding promise made by a seller to hold an offer open for a specified period of time, not requiring consideration to be enforceable under certain conditions in commercial transactions.

Breach of Warranty

Failure to fulfill the terms of a promise or guarantee made about the quality or duration of a product or service.