Zuzu is a large manufacturer of snack cakes. The company operates distribution centers in Chicago. The distribution
Question:
During a recent trip to the Chicago center, Spalding wandered into the snack cake warehouse. He noticed that most of the snack cake "seconds" were being packed and sent off to grocery warehouses instead of being sent to the outlet stores. When he asked one of the workers, he was told that the center's manager had directed workers to stop sending all the "seconds" to the outlet except for the extremely damaged packages. This practice resulted in the center over reporting both yield and ending inventory of normal, saleable product. The overstatement of Chicago inventory will have a significant impact on Zuzu's financial statements.
Required
1. What should Spalding do? You may want to refer to the IMA Statement of Ethical Professional Practice.
2. Which lever of control is Zuzu emphasizing? What changes, if any, should be made?
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
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