In One of the Case Studies in the Textbook, Cy

question 12

Multiple Choice

In one of the case studies in the textbook, Cy Chesterly was the vice president in charge of sales for one of the largest machine parts manufacturers in the Midwest. He was an excellent salesman and helped build the company into one of the most successful in the industry. While Chesterly was known to go overboard on the entertainment expenses, he really went wild when it came to buying personal items-vacations, furniture, and jewelry to name a few. What other frauds turned up in the investigation?

• A) Chesterly put his girlfriend on the payroll as a ghost employee.
• B) Chesterly skimmed some of the cash sales.
• C) Chesterly falsified sales figures to collect unearned bonuses.
• D) Chesterly cut special deals to his customers and received kickbacks in return.

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Definitions:

Variable Selling

Costs that vary directly with the volume of sales, including commissions and shipping fees.

Administrative Expense

Costs related to the general operations of a business that are not directly tied to the production of goods or services.

Cash Disbursements

Payments made in cash by a business, including expenses, debt payments, and dividend distributions.

Raw Materials

The basic materials and components used in the manufacturing process of products.