A Well-Designed System of Management Risk Assessment Is Likely to Help

question 57

Multiple Choice

A well-designed system of management risk assessment is likely to help management identify the risks:

• A) relevant to the preparation of appropriate financial statements.
• B) of being over-audited.
• C) of ineffective audit procedures.
• D) of making a loss for the year.

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Definitions:

Labor Rate Variance

The variance between the real labor expenses incurred and the anticipated standard labor costs for the achieved production output.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead costs incurred and the expected (or standard) costs, based on the efficient use of resources.

Standard Cost Variances

The difference between the actual costs incurred and the standard costs pre-established for manufacturing or production.

Cost Of Goods Sold

The direct expenditures involved in producing the products a company sells, namely labor and materials costs.