Inherent Risk Is ________ Related to Detection Risk and ________

question 34

Multiple Choice

Inherent risk is ________ related to detection risk and ________ related to the amount of audit evidence.

• A)directly, inversely
• B)directly, directly
• C)inversely, inversely
• D)inversely, directly

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Definitions:

Variable Component

A portion of a cost or expense that varies directly with the level of activity or production volume.

Fixed Component

The portion of total costs that remains constant regardless of the level of activity or output.

Variable Overhead Rate

This refers to the rate at which indirect, variable costs accumulate over a given period, often linked to production or activity levels.

Efficiency Variance

A measure used in cost accounting to assess the difference between actual and expected usage of resources, often related to time or cost of labor.