Which of the following internal control activities could best prevent direct labor from being charged to manufacturing overhead?
A) Reconciliation of work in process inventory with cost records.
B) Comparison of daily journal entries with the factory labor summary.
C) Comparison of period costs budgets and time cards.
D) Reconciliation of the unfinished job summary and production cost records.

Question

Quizplus · Accepted Answer

Comparison of daily journal entries with the factory labor summary would identify any direct labor that is incorrectly charged to manufacturing overhead. This comparison would allow for prompt correction of errors and help prevent further occurrences. Reconciliations and comparisons of period costs budgets, time cards and production cost records may not necessarily identify direct labor charged to manufacturing overhead.

Which of the Following Internal Control Activities Could Best Prevent