Which of the Following Engagement Observations Would Provide the Least

question 185

Multiple Choice

Which of the following engagement observations would provide the least motivation for management to amend or replace an existing cost accounting system?

• A) The distorted unit cost of a service is 50 percent lower than the true cost, while the true cost is 50 percent higher than the competition's cost.
• B) The organization is losing $1,000,000 annually because it incorrectly outsourced an operation based on information from its current system.
• C) The cost of rework, hidden by the current system, is 50 percent of the total cost of all services.
• D) 50 percent of total organizational cost has been allocated on a volume basis.

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Definitions:

Identify With

The process of associating oneself with specific groups, values, or characteristics, often as part of forming one's social identity.

Embedded In

Integrally involved or deeply ingrained within a particular context, situation, or system.

Laissez-faire

An economic philosophy of free-market capitalism that opposes government intervention.

Democratic

Pertaining to a form of government in which power is vested in the hands of the people, directly or through elected representatives.