In Accumulating Final Evidence Upon Which to Base an Audit

question 19

Essay

In accumulating final evidence upon which to base an audit opinion, the auditor should perform four activities. List the activities below.

Comprehend the importance of a pull manufacturing system over a push system.

Understand the role of inventory in lean manufacturing.

Grasp the significance of lead times in lean manufacturing and the strategies to reduce them.

Appreciate the value of employee involvement in lean manufacturing.

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Definitions:

Direct Labor Costs

Direct labor costs are the wages paid to employees who are directly involved in the production of goods or services.

Factory Wages Payable

Liabilities owed by a company for labor costs associated with the manufacturing process that have not yet been paid.

Work in Process Inventory

Items that are in the production process but are not yet complete, representing one of the stages in the inventory cycle.

Underapplied Overhead

Occurs when the allocated manufacturing overhead costs are less than the actual overhead costs incurred.