If the Same Employee Is Responsible for Authorizing a Business

question 60

Multiple Choice

If the same employee is responsible for authorizing a business transaction and recording the transaction in the accounting records, this indicates a weakness in which element of a company's internal control system?

• A)A good audit trail
• B)Separation of duties
• C)Internal review of controls
• D)Competent employees

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Definitions:

Standard Cost

A predetermined cost of manufacturing a single unit or a number of product units during a specific period, used as a benchmark to control costs.

Variable Manufacturing Overhead

Costs that fluctuate with the volume of manufacturing activity, including supplies, utilities, and indirect labor.

Labor Efficiency Variance

The difference between the actual number of labor hours worked and the standard hours expected to complete the work, multiplied by the standard labor rate.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on the standard cost, attributed to efficiency in using resources.