Divisional management stated that a recent gross margin increase was due to increased efficiency in manufacturing operations. Which of the following audit procedures would be most relevant to that assertion?

a) Select a sample of finished goods inventory and trace raw materials cost back to purchase prices to determine the accuracy of the recorded raw materials price.
b) Obtain a physical count of inventory.
c) Take a physical inventory of equipment to determine if there were significant changes.
d) Select a sample of products, then compare costs per unit this year to those of last year, test cost buildups, and analyze standard cost variances.


Answer: d) Select a sample of products, then compare costs per unit this year to those of last year, test cost buildups, and analyze standard cost variances.

Business

You might also like to view...

Countervailing duties may be imposed

a. in response to a foreign export subsidy. b. in response to a foreign antidumping tariff. c. to promote exports of domestic companies. d. to promote imports of domestic consumers.

Business

Only a limited number of statistics, all of which are based on frequency counts, are permissible on the numbers in a nominal scale

Indicate whether the statement is true or false

Business

Which of the following would be an addition to net income when using the indirect method to derive net cash flows from operating activities?

a. Payment of cash dividends b. Decrease in accounts payable c. Increase in merchandise inventory d. Loss on sale of machinery and equipment

Business

Which of the following sections from the statement of cash flows includes the cash paid for the purchase of Treasury Stock?

A) the financing activities section B) the operating activities section C) the investing activities section D) the non-cash investing and financing section

Business