Chris Was a Systems Analyst Hired to Determine the Best

question 173

Multiple Choice

Chris was a systems analyst hired to determine the best system for a retail china shop.After a careful analysis of the shop's needs and the available software,Chris presented a written reportthat was approved by the owner of the business.Chris was paid his fee and was asked by the owner if he would act as his agent in purchasing the hardware and software recommended in the report.The purchase was not to exceed $40 000 and the commission was to be $1000.Chris agreed.Read each of the following separately and indicate which is true.

• A) The agreement to act as agent fails to be a valid agency contract because it is not in writing.
• B) If Chris buys the hardware and software himself for $36 000 and sells it to the owner for $39 000, he is entitled to his commission because the price to the owner is still within the price allowed.
• C) Chris will not be in breach of his fiduciary duty if he buys the recommended system from a firm in which he has an interest, even if he does not mention that fact to the owner.
• D) Chris could be in breach of his duties if he delegated the task to someone else.
• E) Chris is entitled to accept a commission from both the seller and the purchaser, as long as the total price paid by the purchaser is less than $40 000 and the hardware and software is comparable to that recommended in the report.

Determine the net operating income and the adjusted Cost of Goods Sold after closing variances.

Understand the process of transferring costs in a standard cost system, including the impact on Work in Process and Finished Goods inventories.

Evaluate the financial performance of a manufacturing company through preparation of an income statement.

Analyze the impact of standard cost variances on financial statements and their closure to Cost of Goods Sold.

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Definitions:

GAAP

GAAP, or Generally Accepted Accounting Principles, are a set of rules and standards designed to improve the clarity, consistency, and comparability of the communication of financial information.

Departmental Overhead Rate

A measure used to allocate overhead costs to individual departments based on certain criteria, like direct labor hours.

Cost Object

Any item for which cost is measured and assigned, such as products, services, or departments.

Plantwide Overhead Rate

A single overhead rate calculated for an entire manufacturing plant, used to allocate overhead costs to products.