When Auditing Manufacturing Overhead Costs Assigned to Inventory, Auditors Should

Multiple Choice

When auditing manufacturing overhead costs assigned to inventory, auditors should keep in mind that

A) GAAP has strict procedures that must be followed when assigning overhead to work-in-process inventory.
B) overhead costs must be allocated to raw materials, work-in-process, and finished goods inventory.
C) management typically allocates overhead using total direct labor dollars as the basis for the allocation.
D) determining the reasonableness of the allocation method is relatively simple for work-in-process inventory.