To Make a Year-To-Year Comparison of Inventory Turnover Most Meaningful

question 15

Multiple Choice

To make a year-to-year comparison of inventory turnover most meaningful, the auditor will perform the analysis

• A)for the company as a whole.
• B)by division.
• C)by product.
• D)All of the choices are correct.

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Definitions:

Standard Cost Systems

Accounting systems that use standards for each element of manufacturing cost entering into the finished product.

Product Costs

The total of direct materials, direct labor, and manufacturing overhead allotted to a product, representing the cost to produce goods.

Volume Variance

The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed overhead for the actual production achieved during the period.

Normal Capacity

The average level of operational output that a company can sustain with its current resources, over a specific period and under normal conditions.