1. Inflating costs of cost-plus contracts so that the price of the contract increases as does the...
Question:
1. Inflating costs of cost-plus contracts so that the price of the contract increases as does the profit for the contract
2. Assigning costs from a fixed-fee contract to a cost-plus contract so that both contracts become more profitable
3. Substituting materials of a lower quality than specified in the contract to reduce costs and increase profits
4. Shifting costs from completed jobs (in Cost of Goods Sold) to incomplete jobs (in Work in Process Inventory) to both increase profits reported for financial accounting purposes and inflate assets on the balance sheet
5. Using manufacturing methods or materials that violate the intellectual property rights of other firms (e.g., patent rights of competitors)
6. Recording the disposal value from the sale of defective work in a cost-plus contract job as “Other Revenue” rather than reducing the inventory cost of the related job
Step by Step Answer:
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn