Fraud Examination
6th Edition
ISBN: 9781337619677
Author: Albrecht, W. Steve, Chad O., Conan C., Zimbelman, Mark F.
Publisher: Cengage,
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Chapter 14, Problem 3SC
(1)
To determine
The course of action to be taken by the Assistant Controller.
(2)
To determine
The issues in the given case.
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Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance itsgrowth. The bank requires financial statements before approving the loan.Required:Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank.1. Depreciation on salespersons’ cars.2. Rent on equipment used in the factory.3. Lubricants used for machine maintenance.4. Salaries of personnel who work in the finished goods warehouse.5. Soap and paper towels used by factory workers at the end of a shift.6. Factory supervisors’ salaries.7. Heat, water, and power consumed in the factory.8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.)9. Advertising costs.10. Workers’ compensation insurance for factory…
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Instructions
a. Does your…
Case Study
Muscat Tubes Manufacturing LLC is a manufacturer of television picture tubes. The company must keep various
types of materials on hand for the manufacturing process. The store manager is having difficulty keeping track of all
the inventory. When compared to last year, the amount of material lost has increased, which is a source of concern
for the store manager. He wishes to employ an effective tool for controlling material loss. While exploring, he came
across the concept of ABC analysis, which is used by many MNCS around the world. Because he has no background
in costing, he is unable to grasp the concept. He asked you to explain the following because you are the company's
cost accounting executive:
BIs.
d. Steps involved in classification of ABC analysis.
Chapter 14 Solutions
Fraud Examination
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