A Major Difficulty in the Verification of Inventory Cost Records

question 83

Multiple Choice

A major difficulty in the verification of inventory cost records for the purpose of inventory valuation is in determining the reasonableness of the:

• A)direct labor hourly rate.
• B)raw material per unit cost.
• C)manufacturing overhead costs.
• D)number of direct labor hours applied.

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Definitions:

Demand Instrument

A financial document that requires payment to the holder on demand or at a pre-defined time.

Secondary Party

An individual or entity indirectly involved in a legal agreement or crime, not the principal actor or participant.

Unconditional Promise

A commitment that does not depend on any conditions to be fulfilled; it is absolute and unequivocal.

Negotiable

Capable of being discussed, transferred, or modified in terms of conditions or agreement.