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18. In the conversion process, indirect labor is first recorded to which of the following accounts?...

18.

In the conversion process, indirect labor is first recorded to which of the following accounts?

Multiple Choice

  • Manufacturing Overhead.

  • Finished Goods.

  • Raw Material Inventory.

  • Work-in-Process Inventory.

34.

The use of data analytics will likely result in significant changes to clients’ expectations of their auditors. Which of the following is most likely not one of those expected changes?

Multiple Choice

  • More time spent gathering and testing data.

  • More innovative thinking.

  • Deeper and broader insights.

  • Faster and more efficient delivery of audit findings.

35.

Which of the following least reflects the purpose of a business rule in the conversion process?

Multiple Choice

  • Assuring that all products meet quality standards

  • Segregating authorizing, issuing, and conversion work duties

  • Limiting who can view and change records in the system

  • Ensuring no production without a customer order

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Answer #1

Indirect labor is not directly related in conversion of raw materials into finished goods but is a part pf production process. Examples of indirect labor are security guards, production supervisor etc.

Manufacturing overhead includes all the indirect costs ie. indirect materials and indirect labor, incurred for production. Indirect labor are charged to factory overhead i.e. manufacturing overhead and then further moved to the produced units.

Finished goods are goods whose production process is completed but are not yet sold to customers. The cost of indirect labour ends up in finished goods but it is not first recorded in finished goods or cost of goods sold.

Raw material inventory is the stock of raw materials that have not been used in the production process yet. It includes direct materials and indirect materials. Hence, indirect labor is not recorded in this account.

Work in process inventory are partially completed goods which needs to be further processed to get ready for sale. Indirect labor is not first charged to this account.

Hence, in the conversion process, indirect labor is first charged to Manufacturing Overhead account.

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