Everett Is an Accountant Whose Clients Include Finance & Capital

question 12

Multiple Choice

Everett is an accountant whose clients include Finance & Capital, Inc. Under the Ultramares rule, if Everett is negligent in his work for Finance & Capital, he could be liable to Finance & Capital and

• A) any third party.
• B) no third party.
• C) third parties who are foreseen users of the work.
• D) third parties who are reasonably foresee?able users of the work.

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Definitions:

Variable Production Costs

Costs that vary directly with the level of production, such as raw materials and direct labor expenses.

Variable Costing

An accounting method which only includes variable costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.

Unit Product Cost

The cost assigned to a single unit of a product, incorporating all relevant expenses involved in its production.

Gross Margin

The difference between revenue and cost of goods sold, which indicates how much the company earns from its core business activities before overhead costs.