When Using the Audit Risk Model

question 79

Multiple Choice

When using the audit risk model,

• A) auditors find it relatively easy to measure the components of the model.
• B) many auditors use broad and subjective measurement terms.
• C) auditors find it easy to measure the amount of evidence implied by a given planned detection risk.
• D) auditors are only concerned with understating accounts.

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Definitions:

Variable Factory Overhead

Costs that fluctuate with the level of production, such as utilities and materials used in the manufacturing process.

Direct Labor Cost

The total cost of all labor that can be directly attributed to the manufacturing or production of goods or services.

Controllable Cost

Expenses that can be influenced or managed by decisions made by a manager or a business, such as materials or labor.

Supervisor

An individual in charge of overseeing and directing the work of a group of people.