Consider the Following Short Case as You Respond to the Next

question 47

Multiple Choice

Consider the following short case as you respond to the next nine questions: ABC Consulting's employees include management, consultants and office staff. The company accepts engagements related to internal control design and evaluation, as well as enterprise risk management plans. A customer can purchase the two services independently of one another. The office staff bills clients on a monthly basis with terms of 2 / 10, n / 30. All consulting clients must sign a contract, which is also signed by an ABC manager. One member of ABC's management team assigns at least one consultant to work with the customer until the engagement is complete. Consultants can be assigned to multiple engagements simultaneously, but every consultant must always be working on at least one engagement. Each client may have only one contract with ABC at a time.In a REA model of the case, events would include:

• A)Sign contract
• B)Assign employees
• C)Bill customer
• D)All of the above

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Definitions:

Direct Materials

Raw materials that can be directly attributed to the production of a product.

Direct Labor

The cost of wages for employees directly involved in the production or manufacturing of goods.

Cost of Goods Sold

The total cost associated with making or acquiring any goods sold during a specific period, including materials, labor, and overhead.

Materials

The physical components or substances used in the production of goods.