Case Study 2: Independence Alert
1. Dear Ms. Daneo,
Thank you for notifying us that your husband, Randy, is holding 120 shares of Class B
common stock of Bond. I am sorry to inform you that your independence as an audit
partner has been impaired.
The objective of the ordinary audit of financial statements is the expression of an opinion on:
a. the fairness of the financial statements.
b. the accuracy of the financial statements.
c. the accuracy of the
18) For each item below indicate the source documents that would most likely authorize the
journal entry in a job-costing system.
a. direct materials purchased
b. direct materials used
c. direct manufacturing labor
d. indirect manufacturing labo
14) Explain how a top-selling product may actually result in losses for the company.
Answer: If indirect costs are not properly allocated to the products, a product may appear to cost
less than it actually does cost to produce. If the sellin
22) The Joe's Pottery manufactures pottery products. All direct materials are included at the
inception of the production process. For April, there was no beginning inventory in the
processing plant. Direct materials totaled $155,000 for the month. Work-i
Chapters 1 and 2
An Overview of the History of the Auditing Profession
The Public Accounting Environment
Important Interviewing Points
The 10 Generally Accepted Auditing Standards
The Standard Setting Process in Auditing and An
1. Fundamental Concepts and Characteristics of Fraud
a. Evaluation of the auditors fraud detection responsibilities
b. Treadway Committee Report findings
c. Who commits fraud and why?
2. The Auditors Responsibility for Detecting and Repo
Cost Behavior and CVP
Cost Classifications for
Predicting Cost Behavior
Cost behavior refers to
how a cost will react to
changes in the level of
activity. The most common
THE AUDITOR THE INSTRUCTIONAL NOVELLA
The Auditor the Instructional Novella by James K. Loebekke is an awesome supplemental
reading for those who want to pursue Public Accounting. There is no denying that this novella is
provoking, insightful and encourag
c-Chart - A shirt manufacturer buys cloth by the 100-yard roll from a supplier. For setting up a control chart to manage the irregularities (e.g.,
loose threads and tears), the following data were collected from a sample provided by the supplier.
MAD = Sum of Abs Dev/n n=number of months
= Cumulative Error
MAPE = MAD/ Avg of Actual demand
TS = CFE/MAD ; CFE
Economic Order Quantity ; EOQ = Q = 2DS/H ; D = Annual Demand, S = Ordering cost, H = Holding Cost
Time Between Orders; TBOeoq = EOQ/D x 12 -F
Chapter 9 Master Production Scheduling Problem
7. MPS Record Completion: Complete the Master Production Schedule record shown below.
Lot Size: 100
Quantity on Hand: 75
Customer orders (booked)
Projected on-hand inventory
14) There are basically two distinct methods of calculating product costs.
Compare and contrast the two methods.
Answer: In job costing the job or product is a distinctly identifiable product or service. Each job
requires (or can require) vastly