A Purchasing Agent Who Is an Owner of 25% of the Shares

question 30

True/False

A purchasing agent who is an owner of 25% of the shares in a supplier does not have a conflict of interest.

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Definitions:

Static Budget

A budget based on a set level of activity or volume that does not adjust over the period for actual activity levels.

Standard Cost

A pre-determined estimate of the cost to produce a single unit or a number of units during a specific period.

Machine Hours

A measure of production time, calculating the total hours that machines are operated in the manufacturing process.

Standard Cost System

An accounting system that uses cost estimates for raw materials, labor, and overhead to set prices and measure efficiency.