Question: Agree Ltd has a cost allocation problem. The total direct labour costs allocated to products produced in the previous month does not seem to match

Agree Ltd has a cost allocation problem. The total direct labour costs allocated to products produced in the previous month does not seem to match the total amount recorded in the labour costs data store. Agree Ltd seems to have good controls; it allocates labour costs of production regularly, and reconciles labour charges at the end of each month.

(a) Which internal controls might be missing? (LO5)

(b) What documentation would you examine in order to investigate this problem?

(LO4)

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