Non-Statistical Sampling May Be Better to Use Than Statistical Sampling

question 1

Multiple Choice

Non-statistical sampling may be better to use than statistical sampling when ________.

• A)the auditor has insufficient knowledge about the population to take a statistical sample
• B)the inherent risk of error in the population is low
• C)the population is known to be diverse,with a high inherent risk of error
• D)auditors are not technically proficient in sampling

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Definitions:

Predetermined Overhead Rate

An estimated charge per unit of activity used to allocate manufacturing overhead costs to products, calculated before the accounting period begins based on expected costs and activity levels.

Total Costs Added

The total amount of direct materials, direct labor, and overhead costs incurred during a specific period for the goods produced.

Work in Process

Inventory representing items that have started the production process but are not yet complete, indicating ongoing manufacturing activities.

Finished Goods Inventory

The inventory of completed products that are ready to be sold.