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Inventory Management

Tests of account balances are intended to obtain audit evidence about the fairness of the inventory accounts or, alternatively, identify material misstatements in the amounts presented. Audit procedures can only be selected after the auditor determines specific audit objectives related to management assertions. Management Assertions 1. Existence or occurrence 2. Completeness 3. Rights and obligations 4. Valuation or allocation 5. Presentation and disclosure Required: For each audit procedure below, identify the related management assertion(s) that the audit procedure tests and explain the audit objective of the procedure. (a) Trace totals of inventory files to the general ledger, including proper classification as raw materials, WIP, or finished goods. (b)Test additions to inventory by selecting a sample of recorded purchases from the inventory records and examining supporting documents. (c) Review consignment contracts and scan inventory records for inclusion of amounts for any consigned items not owned. (d)Reperform calculations supporting decisions about write-downs or write-offs of inventory and trace any adjustment amounts to the inventory records. (e) Using computer-assisted auditing techniques reperform calculations testing mathematical accuracy, including totals extensions of price and quantity and unit or batch aggregations; recalculation is based on appropriate application of the client costing method (FIFO, LIFO, weighted average, specific identification, etc.).

Tests of account balances are intended to obtain audit evidence about the fairness of the inventory accounts or, alternatively, identify material misstatements in the amounts presented. Audit procedures can only be selected after the auditor determines specific audit objectives related to management assertions. Management

Inventory Management Manufacturing

The manager of a furniture manufacturing plant hopes to achieve a better allocation of inventory control efforts by adopting an ABC approach to inventory control. The yearly usages are listed below. Classify the items in A, B, and C categories according to annual dollar usage. Item Annual Usage Unit Cost L

Alternative Sources of Evidence

The following situations present the auditor with alternative sources of evidence regarding a particular assertion. a. For each of the following situations, identify the assertion(s) the auditor is most likely testing with the procedure. b. For each situation, identify which of the two sources presents the most persuasive ev

Management of Inventory Example

Original only please in 200-250 words with two references. Locate a firm that incorporates the fixed order quantity system, fixed order period system, or a hybrid system to its management of inventory. Identify the type of inventory system it uses. Indicate the type of inventory issues the firm has such as stock out co

Queries

Write queries to answer the following questions. Note some questions, you may have to create two queries - one to calculate an invoice total and the second to answer the question asked. a) How many kinds of inventory items does S & S sell? b) How many sales were made during October? c) What were total sales in October?

Define Terms, Discuss Process and Techniques, Six Sigma

Succinctly defines in his or her own words the terms operations management, operational efficiency, operational effectiveness, operations strategy, and operational sustainability. Next critically discusses the process of operations management and how it is done within their organization, using the terms just defined. Find at

The following misstatements are included in the inventory and related records of Westbox Manufacturing Company: 1. An inventory item was priced at $12 each instead of at the correct cost of $12 per dozen. 2. In taking the physical inventory, the last shipments for the day were excluded from inventory and were not included as a sale until the subsequent year. 3. The clerk in charge of the perpetual inventory master file altered the quantity on an inventory tag to cover up the shortage of inventory caused by its theft during the year. 4. After the auditor left the premises, several inventory tags were lost and were not included in the final inventory summary. 5. When raw material acquisitions were recorded, the improper unit price was included in the perpetual inventory master file. Therefore, the inventory valuation was misstated because the physical inventory was priced by referring to the perpetual records. 6. During the physical count, several obsolete inventory items were included. 7. Because of a significant increase in volume during the current year and excellent control over manufacturing overhead costs, the manufacturing overhead rate applied to inventory was far greater than actual cost. Required 1. For each misstatement, state an internal control that should have prevented it from occurring. 2. For each misstatement, state a substantive audit procedure that could be used to uncover it.

The following misstatements are included in the inventory and related records of Westbox Manufacturing Company: 1. An inventory item was priced at $12 each instead of at the correct cost of $12 per dozen. 2. In taking the physical inventory, the last shipments for the day were excluded from inventory and were not inclu

minimize total inventory cost

The need of a company is 16000 units/year, demand is constant throughout the year, ordering cost is $25 per order, and the holding cost is 20% per unit. These suppliers below are offering discount. So which of the two suppliers should be selected to minimize total inventory cost, and what would be the inventory cost? supplier

Set of Internal Controls to Stop the Losses of Inventory

See the attached file. Jason Company, a small electronic distributor, has experienced losses of inventory over the past year. Sara Jason, the owner, on the advice of her accountant, has adopted a set of internal controls in an effort to stop the losses. Jason has taken the following steps: 1. She encourages employees to foll

Help with solutions

9.A company has the following forecast demand for the next six months: Month 1 2 3 4 5 6 Demand 300 300 400 300 300 400 The following information is also available. Workdays/month = 20 Labor hours/unit = 16 Working time/day = 8 The firm must p

Partnership recognize gain or loss as a result of this distribution

Can you help me with this assignment? 1 Greg's outside basis in his interest in the GO Partnership is $360,000. In a proportionate non-liquidating distribution, the partnership distributes to him cash of $60,000, inventory (fair market value of $200,000, basis to the partnership of $160,000), and land (fair market value of $

Inventory Systems, Increases, Inclusion Count & Vendor Discounts

7. Detailed records of movements in merchandise (each purchase and sale) are not maintained in the inventory account in a A. perpetual inventory system. B. periodic inventory system. C. double entry accounting system. D. business that sells expensive merchandise. 8. Hunter Company purch

P17-3A Elbert Company Problem

P17-3A The income statement of Elbert Company is presented here: Elbert Corporation Income Statement For the Year Ended November 30, 2010 Sales - $7,700,000 Cost of Goods Sold Beginning Inventory -$1,900,000 Purchases - $4,400,000 Goods Available for Sale - $6,300,000 Ending Inventory - $ 1,400,000 Total Co

Gross Profit Ratio, Inventory Turnover Ratio and Average Days

** Please see the attached file for the complete problem description ** Please help me with the attached problem. The table below contains selected financial information included in the 2009 financial statements of Saks, Inc.., and Dillard's, Inc., two companies in the department store industry. ($ in Mil

Present Total Annual Stocking Costs

3.  The general manager of a local pool supply company wants to determine if he could save money if he used an EOQ ordering system, instead of the current rule of thumb approach.  He instructs Mr. Num Bercrunch, an inventory analyst, to conduct an analysis of one of the most popular pumps.  Mr. Bercrunch develops the followin

Inventory management

SuperValue Foods is a supermarket that stocks a special brand of cookies called Classic Cookies it purchases from Distinctive Foods. Demand for Classic Cookies is 5000 boxes per year (365 days) and the daily demand can be assumed to be a constant. The cost of ordering a batch of boxes of cookies is $80 per order including the co

Inventory Management: Wheel-Rite

Arthur Meiners is a production manager of Wheel-Rite, a small producer of metal parts. Wheel-Rite supplies Cal-Tex, a larger assembly company, with 10,000 wheel bearings each year. This order has been stable for some time. Setup cost for Wheel-Rite is $40, and holding cost is $.60 per wheel bearing per year. Wheel-Rite can produ

Inventory Management for workbooks: EOQ, holding costs, ordering costs

Please use the attached excel worksheet to answer the problem. William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: Demand D = 19, 500 units/year Ordering cost S = $25/order Holding cost H = $4/unit/year a) Calculate the EOQ for the workbooks. b) What are the

Inventory Management for Houts Plastics: Classifications for ABC system

See attached file. l. Houts Plastics is a large manufacturer of injection-molded plastics in North Carolina. An investigation of the company's manufacturing facility in Charlotte yields the information presented in the table below (see attachment). How would the plant classify these items according to an ABC classificatio

Furniture Manufacturers Inc

Furniture Manufacturers Inc uses 20,000 loads of lumber per year. A load of lumber costs $500 and the carrying cost is 10 percent of the unit cost. The cost to order is $200 per order and the lead time is three working days. Assuming 200 working days determine, (a) the economic order quantity, (b) the reorder point, (c) numbe

Hoehn Manufacturing Company

Hoehn Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that all transactions are cash transactions. 1. Acquired $50,000 cash by issuing common stock. 2. Paid $8,000 for the materials used to make its pr

Budgeting Worksheets for Fantastic, Inc.

1. Prepare the following budgets for the fiscal year ending December 31, 2006 using the provided spreadsheets. Note: it is required to use the provided worksheets using Excel formulas. 1. Direct labor budget 2. Manufacturing overhead budget 3. Projected Cost of Goods Manufactured (absorption costing) The attached exce

Powerswitch INC.: Ending Inventories

See attached template. PowerSwitch, Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout North Carolina affected PowerSwitch's facilities. Inventory was completely ruined, and the company's computer system, including all accounting records, was destroyed. Before the disaster recov

Managing the Supply Chain for Home Depot

For this project, examine how Home Depot manages its inventory and then write a paper. APA Style, references, citation answer the following questions. Q1. Describe the ways in which Home Depot manages its inventory. Q2. How does the Home Depot's approach to inventory management impact on the efficiency of its supply cha

Operations management - Inventory control

Charlie's pizza orders all its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly from Italy. An American distributor stops by every four weeks to take orders. Because the orders are shipped directly from Italy, they take three weeks to arrive. Charlie's Pizza uses an average of 150 pounds of pepperoni ea

Inventory managment and scheduling questions

1. Briefly discuss the advantages and disadvantages of each of the following strategy plans: ? Maintain a level rate of output and let inventories absorb fluctuations in demand. ? Vary the size of the workforce to correspond to predicted changes in demand requirements. ? Maintain a constant workforce size, but vary hours work

Prat Corporation and Subsidiary

Prat Corporation paid $24,800 for an 80% interest in Sage Corporation on January 1, 2002, at which time Sage's stockholders' equity consisted of $15,000 of Common Stock and $6,000 of Retained Earnings. The fair values of Sage Corporation's assets and liabilities were identical to recorded book values when Prat acquired its 80% i