10. As part of the annual audit you notice that "Indirect labor salaries" included the $20,000 salary

paid to Ken, who actually works in the advertising department of the company.

a) Does this seem reasonable? Why or why not?

b) Does this make a difference in terms of the net operating in come? Why or why not?

c) What incentive would management have to include the advertising costs as "in direct

labor"? (That is, what would their motivation be to do this?)