Case study, Cost Accounting

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Ask q6) The Net Sales revenue reported is derived from the sale of products. Each year Findley records from cash sells, sells on account and completed purchase orders. During 2016 and 2017, approximately 12% of the revenue recorded was generated from purchase orders for which customers have not taken possession of the products. However, the products have been segregated from other products in the warehouse and are available for the customers to pick-up. The customers have various reasons for not taking possession of the products: 1) a lack of available space for inventory, 2) current inventory levels are high, but it is anticipated that the inventory will decrease in the coming months, and 3) the production schedule has been delayed, so the customer is not ready for the products, yet. The Controller of Findley has stated that only a small portion of the revenue is derived from customers that have not picked up their products, thus the financial statements accurately reflect Findley’s financial performance.
• Prepare a memo that either supports or refutes the Controller’s position.


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