All of the Following Are Internal Control Procedures That Should

question 81

Multiple Choice

All of the following are internal control procedures that should be in place in the conversion cycle except

• A)calculation and analysis of direct material and direct labor variances
• B)retention of excess materials by work centers
• C)physical count of inventory items on hand
• D)limited access to raw material and finished goods inventories

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, measured by the area above the supply curve and below the price level.

Demand

The desire to purchase goods and services backed by the ability and willingness to pay a certain price.

Consumer Surplus

The gap between the total price consumers are ready and able to spend on a good or service and what they actually spend.

Willingness To Pay

The maximum amount an individual is prepared to spend to acquire a good or service.