Miss Hap, the company bookkeeper, recorded the annual repair costs on the company's machinery as an increase to the Machinery ac
count. As a result, which of the following statements correctly describes this situation? A. Expenses will be overstated.
B. Liabilities will be overstated.
C. Stockholders' equity will be understated
D. Assets will be overstated.
In this scenario, Chevron identified their desired outputs and then worked backward by examining the supporting processes. They used a holistic approach that led the company to examine the interdependencies among processes used in different business units. This is a Business Process Reengineering (BPR) approach. It is a radical approach and process to redefining a business entity so as to enhance productivity.
All the cost of material and labor are directly charged to the processing departments which later on transfer from department to department and eventually become the part of finished goods. Material costs are assigned to work in process of the first processing department all the costs associated with this department are added and then it transferred to the next departments for further cost allocation.