Which of the Following Is a Substantive Analytical Procedure to Determine

question 128

Multiple Choice

Which of the following is a substantive analytical procedure to determine if there is idle equipment or equipment that was disposed of but not written off?

• A) Compare depreciation expense divided by gross equipment cost with previous years.
• B) Compare gross manufacturing cost divided by some measure of production with previous years.
• C) Compare accumulated depreciation divided by gross equipment cost with previous years.
• D) Compare annual repairs and maintenance accounts with previous years.

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Definitions:

Labour Efficiency

The measure of the amount of work achieved by a workforce compared to the effort put in.

Material Quantity

The amount of raw materials or supplies used in the production of goods, often monitored to control costs and ensure efficient resource use.

Labour Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, based on the hours worked.

Favourable Variance

A financial term indicating that actual costs were lower than budgeted costs, or actual revenues were higher than expected.