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It has come to the CEO’s attention that Sally, a company salesperson, grants the rights to wholesalers to return unsold product. He asks you to discuss the following at the next board of directors meeting:
In the system of internal control, are Sally?s actions a significant deficiency or a material weakness?
Explain your reasoning and rationale.
You are the vice president of operations for a small manufacturing company that uses the absorptive method of accounting for fixed manufacturing overhead, and you are approaching the end of the year. The accounting manager just visited some of your supervisors and said that the profitability of the company can appear better if more products were produced, even if they are not all sold right away. Many of the supervisors do not understand how this makes sense and asked you to explain it. You decide to meet with all the production supervisors to explain this.
Explain how the profitability of the company can be made to look better if they were to produce more products, even if they are not all sold right away.
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