Auditors' Test of Controls Over the Production of Estimate Amounts

question 45

True/False

Auditors' test of controls over the production of estimate amounts is limited to a comparison of past estimates compared to actual amounts.

---

Definitions:

Capacity

Capacity refers to the maximum amount of work that an organization is capable of completing in a given period.

Unused Capacity

The available but unutilized production capability or volume in a given period, indicating inefficiencies or room for output expansion.

Cost Object

Anything for which cost data are desired. Examples of cost objects are products, customers, geographic regions, and parts of the organization such as departments or divisions.

Indirect Cost

Costs that are not directly traceable to a specific product, project, or activity, such as utilities, rent, and administrative expenses.