EBK AUDITING: A RISK BASED-APPROACH
EBK AUDITING: A RISK BASED-APPROACH
11th Edition
ISBN: 9781337670203
Author: RITTENBERG
Publisher: YUZU
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Chapter 6, Problem 15RQSC
To determine

Introduction : The objective of this study is to analyze the most effective methods in testing the sales account balance that need to be followed by an auditor.

Relevant measures that need to be takenappropriately for an auditor to effectively test the sales account balance.

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Nafth Company has an Equipment Services Department that performs all needed maintenance work on the equipment in the company's Fabrication and Assembly Departments. Costs of the equipment Services Department are charged to the Fabrication and Assembly Departments on the basis of direct labor-hours. Data on direct labor-hours for last year follow: Budgeted direct labor-hours Actual direct labor-hours Peak-period direct labor-hours Fabrication Assembly Total 21,000 51,000 72,000 26,000 56,000 82,000 31,000 71,000 102,000 For the year just ended, the company budgeted its variable maintenance costs at $220,000 for the year. Actual variable maintenance costs for the year totaled $265,000. For performance evaluation purposes, how much of the $265,000 of actual variable maintenance cost should be charged to the Assembly Department at the end of the year just ended? Note: Do not round your intermediate calculations.
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