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Iteru [2.4K]
3 years ago
12

What could happen if you end a service contract early?

Business
1 answer:
wariber [46]3 years ago
8 0

You are charged an early termination fee.

Explanation:

When you sign a contract you will have to see if y<u>ou are viable to pay an early termination fee in case you decide to terminate a contract</u> in between and if so how much it will cost to do so.

<u>There are no other legal obligations in place usually unless directly specified in the service contract. </u>

Usually the fee is to cover for the cost procured or that will be procured on securing newer services in the face of the termination.

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C. additional information

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Solution :

1. Allocation on the basis of $\text{Direct labor hours}$

                                              LX                               EX

Direct Material                    125000                       90000

Direct $\text{labor}$ cost                  90000                       60000

Manufacturing overhead      $81000$                        $121500$

                              (202500/5000 x 2000)     (202500/5000 x 3000)

Total cost                             296000                       271500

Units produced                       50                               30

Cost per unit                          5920                           9050

2. Allocation on the basis of $\text{Direct labor costs}$:

                                              LX                               EX

Direct Material                    125000                       90000

Direct labor cost                  90000                       60000

Manufacturing overhead    121500                       81000

                        (202500/150000 x 90000)     (202500/150000 x 60000)

Total cost                             336500                       231000

Units produced                       50                               30

Cost per unit                          6730                           7700

3. Allocation on the basis of $\text{machine hours}$

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Direct Material                    125000                       90000

Direct labor cost                  90000                       60000

Manufacturing overhead    112500                        90000

                              (202500/2700 x 1500)     (202500/2700 x 1200)

Total cost                             327500                       240000

Units produced                       50                               30

Cost per unit                          6550                          8000

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The description including its question throughout the discussion is summarized throughout the explanatory section below.

Explanation:

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