In Which One of the Following Situations Is the Principal

question 39

Multiple Choice

In which one of the following situations is the principal not responsible for the conduct of his agent?

• A) In his job selling vacuum cleaners for Ace Vacuums Ltd., Joe drove his car carelessly and hit a pedestrian on his way to deliver a vacuum cleaner to a customer. He was an independent agent.
• B) When selling vacuum cleaners for Ace Vacuums Ltd., Joe lied to the customer about the qualities of the vacuum being sold. He was an independent agent.
• C) In his job selling vacuum cleaners for Ace Vacuums Ltd., Joe drove his car carelessly and hit a pedestrian on his way to deliver a vacuum cleaner to a customer. He was an employee of Ace.
• D) When selling vacuum cleaners for Ace Vacuums Ltd., Joe lied to the customer about the qualities of the vacuum being sold. He was an employee of Ace.
• E) When driving the employer's car to sell vacuums to a customer, Joe hit a pedestrian. Joe was an employee.

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Definitions:

Sales Mix

Sales mix is the proportion of different products or services that a business sells, impacting the overall profitability based on the differing margins of each item.

Operating Income

Profit realized from a business's core operations, calculated before taxes and interest.

Contribution Margin Ratio

A financial metric showing the percentage of sales revenue remaining after variable production costs have been deducted, indicating how much contributes towards covering fixed costs and generating profits.

Net Operating Income

Profit generated from a company's regular business operations, excluding deductions for interest and taxes.