A Good System of Internal Control Is Designed to Achieve

question 15

Multiple Choice

A good system of internal control is designed to achieve each of the following, except

• A) efficiency of operations.
• B) reliability of financial reporting.
• C) compliance with relevant laws and regulations.
• D) attainment of target sales.

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Definitions:

Direct Labor Standards

These standards define the amount of time and the rate of pay anticipated for direct labor required to manufacture a product or provide a service.

Actual Direct Labor Cost

Actual direct labor cost is the total amount of money paid for the wages of laborers directly involved in the production of goods or services.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours allowed, multiplied by the standard labor rate, indicating efficiency in labor usage.

Direct Labor Standards

The predetermined amount of labor time and cost that it should ideally take to produce one unit of a product, used for budgeting and performance evaluation.