Confirmation Would Be Most Effective in Addressing the Existence Assertion

question 73

Multiple Choice

Confirmation would be most effective in addressing the existence assertion for the:

• A)Addition of a milling machine to a machine shop.
• B)Payment of payroll during regular course of business.
• C)Inventory held on consignment.
• D)Granting of a patent for a special process developed by the organization.

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Definitions:

Variable Production Costs

Expenses that vary directly with the volume of production or sales, like direct labor and raw materials.

Fixed Monthly Cost

Regular expenses that do not fluctuate with production volume or sales, such as rent, salaries, and insurance, billed on a monthly basis.

Contribution Margin

Contribution margin is the difference between sales revenue and variable costs of a product or service, highlighting how much revenue contributes towards covering fixed costs and generating profit.

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remains constant regardless of the level of production, such as salaries of supervisors and rent of the factory.