If an Auditor Used Nonstatistical Sampling Instead of Statistical Sampling

question 353

Multiple Choice

If an auditor used nonstatistical sampling instead of statistical sampling to estimate the value of inventory, which of the following would be true?

• A) The confidence level could not be quantified.
• B) The precision would be larger.
• C) The projected value of inventory would be less reliable.
• D) The risk of incorrect acceptance would be higher.

---

Definitions:

Unit Variable Cost

The cost associated with producing one additional unit of a product, which typically includes materials and labor.

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent, salaries, and insurance premiums.

Contribution Margin

The amount by which sales revenue exceeds variable costs of goods sold, indicating how much revenue contributes towards covering fixed costs and generating profit.

Variable Costs

Expenses that change in proportion to the level of production or sales activity, such as raw materials and direct labor.