Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 28QRA
Grandview Manufacturing Company employs
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When testing a company’s cost accounting system, the auditor uses procedures that are primarily designed to determine thata. Quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand.b. Physical inventories agree substantially with book inventories.c. The system is in accordance with generally accepted accounting principles and is functioning as planned.d. Costs have been properly assigned to finished goods, work-in-process, and cost of goods sold.
Which of the following statement is true under the Standared Costing System
a.
Standard cost is a predetermined or estimated cost to either produce a good/service or perform an activity within the organisation
b.
Standard cost is a control technique that helps to report variances by comparing pre-set standards to actual costs to facilitate action
c.
Both a and b are incorrect
d.
Both a and b are correct
When an auditor tests a client’s cost accounting records, the auditor’s tests are primarily designed to determine that(1) costs have been correctly assigned to finished goods, work-in-process, and costof goods sold.(2) quantities on hand have been computed based on acceptable cost accountingtechniques that reasonably approximate actual quantities on hand.(3) physical inventories are in substantial agreement with book inventories.(4) the internal controls are in accordance with accounting standards and are functioning as planned.
Chapter 12 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 12 - Prob. 1RQCh. 12 - Explain the significance of the purchase order to...Ch. 12 - What segregation of duties would you recommend to...Ch. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - When perpetual inventory records are maintained,...
Ch. 12 - What is meant by a bill and hold scheme?Ch. 12 - What charges and credits may be disclosed in the...Ch. 12 - Prob. 13RQCh. 12 - Prob. 14RQCh. 12 - A well-prepared balance sheet usually includes a...Ch. 12 - Darnell Equipment Company uses the LIFO method of...Ch. 12 - Prob. 17RQCh. 12 - Prob. 18RQCh. 12 - Prob. 19RQCh. 12 - Prob. 20RQCh. 12 - Prob. 21QRACh. 12 - Prob. 22QRACh. 12 - Prob. 23QRACh. 12 - Prob. 24QRACh. 12 - Prob. 25QRACh. 12 - Prob. 26QRACh. 12 - Prob. 27QRACh. 12 - Grandview Manufacturing Company employs standard...Ch. 12 - Prob. 29AOQCh. 12 - Prob. 29BOQCh. 12 - The document issued by a common carrier...Ch. 12 - Which of the following should be included as a...Ch. 12 - Prob. 29EOQCh. 12 - Prob. 29FOQCh. 12 - Instead of taking a physical inventory count on...Ch. 12 - Prob. 29HOQCh. 12 - Prob. 29IOQCh. 12 - Prob. 29JOQCh. 12 - Prob. 29KOQCh. 12 - Prob. 29LOQCh. 12 - Prob. 30OQCh. 12 - Adapted AICPA Task-Based Simulation For each of...Ch. 12 - Prob. 32OQCh. 12 - Prob. 33OQCh. 12 - Prob. 34AOQCh. 12 - Prob. 34BOQCh. 12 - Prob. 34COQCh. 12 - Prob. 34DOQCh. 12 - Prob. 34EOQCh. 12 - Prob. 35OQCh. 12 - Prob. 36PCh. 12 - Prob. 37PCh. 12 - Prob. 38PCh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Prob. 41PCh. 12 - Prob. 42PCh. 12 - Prob. 43ITCCh. 12 - Prob. 44ECCh. 12 - Western Trading Company is a sole proprietorship...
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- You mention changes and revisions to the standard cost systems. If you were the Operations manager of a manufacturing firm, what control would you have in place to assure those changes were proper and accurate? What assertions would apply here?arrow_forwardCompanies that manufacture a product face an expanded set of accounting issues. In addition to the usual accounting matters associated with selling and administrative activities, a manufacturer must deal with accounting concerns related to acquiring and processing raw materials into a finished product. Accounting for this manufacturing process entails consideration of three key cost components that are necessary to produce finished goods. Provide your own numerical data with the calculation and Formula analysis of Material Variances?arrow_forwardThe analysis of standard cost systems begins with the development of standards for direct materials, direct labor, and manufacturing overhead. Discuss standard costs and indicate how they can be used by management in planning and control. Why is it important to consider the relationship among cost, quality, and selling prices when establishing standards for direct materials?arrow_forward
- Companies that manufacture a product face an expanded set of accounting issues. In addition to the usual accounting matters associated with selling and administrative activities, a manufacturer must deal with accounting concerns related to acquiring and processing raw materials into a finished product. Accounting for this manufacturing process entails consideration of three key cost components that are necessary to produce finished goods.” Provide your own numerical data with the calculation and analysis of Material Variances?!arrow_forwardWhich of the following would be classified as an external failure cost on a quality cost report? Multiple Choice O Reentering data because of keying errors. Customer returns arising from quality problems. Test and inspection of in-process goods. Rework labor and overhead.arrow_forwardIdentify the compliance and/or regulatory issues influencing the the cost of the products made. For example, strict regulations on product pricing, tariffs imposed on raw materialsarrow_forward
- A number of activities that are part of a company's quality control system are listed below: Required: 1. Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Prevention Appraisal Cost Internal Failure External Failure Cost Activities Cost Cost a. Product testing b Product recalls C. Rework labor and overhead d. Quality circles e Downtime caused by defects f. Cost of field servicing g. Inspection of goods Quality engineering h. i. Warranty repairs j Statistical process control k. Net cost of scrap Depreciation of test equipment m. Returns and allowances arising from poor quality n. Disposal of production defects O. Technical support to suppliers р. Systems development q. Warranty replacements r. Field testing at customer site Quality training S.arrow_forwardExplain why the Accounting Department should be responsible for producing quality cost reports.arrow_forwardI need help with parts B & C please!! REQUIRED C. Record entry for direct material costs payable and material variances. Record entry for direct labor costs payable and labor variances. Record the entry for variable overhead applied. Record the entry for variable overhead payable. Record the variable overhead variances. Record the entry for fixed overhead applied. Record the entry for fixed overhead payable. Record the fixed overhead variances. Record entry to transfer finished goods to inventory. Record sales on accounts. Record cost of goods sold. Record the disposition of variances to cost of goods sold.arrow_forward
- Cost accounting is an area of accounting concerned with cost determination, cost control and cost analysis. Which of the following is a description of cost control? a. Refers to the use of cost data by management in decision making. b. None of the above c.Refers to the comparison of standards set for costs per unit and with the figures per actual operations so that remedial measures may be adopted if needed. d.Refers to the accumulation of cost data by products, process or services to be able to arrive at a unit cost.arrow_forwardMatch each definition with its related term by selecting the appropriate term in the dropdown provided. Dropdown options: An accounting system that records all actual amounts after the expense has occurred. An accounting system that records all costs based on estimated amounts. An accounting system that records all direct materials and direct labor at actual amounts, while assigning manufacturing overhead costs using predetermined overhead rates. Difference between actual and planned results. Standards that are tight but are used to motivate individuals to work hard and achieve results. Standards that can be achieved only under perfect conditions. The difference between actual cost and the flexible budget for materials. The difference between actual labor hours and standard labor hours multiplied by the actual labor rate. The difference between actual labor hours and standard labor hours multiplied by the standard labor rate. The difference between actual price and standard price…arrow_forwardThe basis used for allocating manufacturing overhead (such as machine hours or direct labor hours) should closely align with O a. estimation techniques used in other areas of financial reporting. O b. the GAAP rules for allocating overhead. O C. the incurrence of overhead costs. d. the way that competitors allocate overhead.arrow_forward
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