Red Ram,Corp

question 2

Multiple Choice

Red Ram,Corp.suspected that the revenues of the company are being overstated.Which of the following conditions can confirm the reasonableness of this suspicion?

• A) The competition faced by the company increased due to the entry of a new competitor in the market.
• B) The labor-force doubled over the previous year resulting in higher salaries and wages cost.
• C) The expenses of the company increased by 150% as compared to the previous year.
• D) The finance head has to show high turnover in order to avail a loan for the company's next project.

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Definitions:

Unit-level Activities

Activities in cost accounting that vary with the number of units produced, such as operating machinery for each unit.

Departmental Unit

A division within an organization with specific responsibilities, often based on function, product line, or geographical area.

Overhead Costs

Expenses related to the operation of a business that are not directly associated with the production of goods or services, such as rent and utilities.

Batch Set-ups

The process of preparing and adjusting equipment and processes for a specific batch of production.