Which of the Following Best Describes the Reason for the Auditors

question 23

Multiple Choice

Which of the following best describes the reason for the auditors' review of the client's cost accounting system?

• A)To obtain evidence regarding the quantities of good described as work in process.
• B)To obtain evidence about the valuation of work in process,finished goods,and cost of goods sold.
• C)To obtain evidence about the profit margin on specific jobs.
• D)To obtain evidence about compliance with Cost Accounting Standards.

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Definitions:

Variable Cost

Costs that change in proportion to the level of goods or services produced, such as materials and labor.

Predetermined Overhead Rate

A calculated rate used to allocate overhead costs to products or services, often based on a specific activity such as labor hours or machine hours.

Special Order

An order for products or services that is outside the company's normal scope of work, often requiring a custom quotation or pricing.

Direct Labor

The workforce costs directly involved in producing a product or delivering a service, excluding indirect labor expenses.