When Testing a Standard Cost System,the Auditor Does Not Normally

question 41

Multiple Choice

When testing a standard cost system,the auditor does not normally make which of the following inquiries?

• A)The method for developing standard costs.
• B)The method for identifying components of overhead and of allocating overhead to products.
• C)The method for identifying sales cutoff.
• D)The method used for allocating variances to inventory and cost of goods sold.

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Definitions:

Profitable

Being profitable means that a company or business generates more revenue than the costs involved in its operation, resulting in a positive financial gain.

Friendly Merger

A merger agreed upon by all parties involved, where the companies willingly combine due to perceived mutual benefits.

Hostile Merger

A takeover attempt that is made against the wishes of the target company's management and board of directors.

Merger Negotiations

Discussions and strategic planning between two or more companies with the goal of combining their operations, typically to achieve synergies.