The Auditor Tests the Quantity of Materials Charged to Work

question 43

Multiple Choice

The auditor tests the quantity of materials charged to work in process by tracing these quantities to:

• A)cost ledgers.
• B)perpetual inventory records.
• C)receiving reports.
• D)material requisitions.

---

Definitions:

Direct Labour Hour

A measure of the amount of time workers spend on a specific task, directly involved in the production of goods or services.

Standard Costing System

A cost accounting system that estimates the cost of products in advance, based on standard inputs of materials, labor, and overhead.

Variable Costing

An accounting method that only includes variable production costs in product costs, excluding fixed overhead.

Sales Price Variance

The difference between the actual selling price of a product and its budgeted or planned selling price, multiplied by the actual quantity sold.