In One of the Cases in the Textbook, Larry Gunter

question 24

Multiple Choice

In one of the cases in the textbook, Larry Gunter was a shipping clerk for a computer company that manufactured microprocessor chips. After learning that the chips were valuable, he stole three boxes and sold them to his girlfriend's father. Since the scheme worked so well the first time, he continued stealing and selling the chips, even letting a co-worker in on the scheme. How was the theft discovered?

• A) A security guard found the chips in a routine check of his work cart.
• B) An inventory manager filling an order noticed that many of the chips were missing.
• C) The auditors found the shortage when they conducted the annual inventory count.
• D) His co-worker notified the loss prevention department in exchange for a cash award.

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in the production of goods or provision of services.

Flexible Budget

A budget that adjusts to changes in the volume of activity, providing a more relevant comparison of actual and budgeted performance.

Controllable Costs

Expenses that can be directly controlled or influenced by a manager.

Manufacturing Overhead Budget

A detailed plan that outlines the expected costs related to manufacturing overhead, including indirect labor, materials, and other expenses.