In Performing a Test of a Control Last Year the Auditors

question 30

Multiple Choice

In performing a test of a control last year the auditors specified a tolerable deviation rate of X percent.This year the auditors have specified a tolerable rate of less than X percent.Assuming that all other factors remain the same,which of the following is true regarding the relationship between this year's sample size compared to last year's sample size?

• A)This year's sample is larger than last year's sample.
• B)This year's sample is smaller than last year's sample.
• C)This year's sample is equal to last year's sample.
• D)This year's sample is indeterminate in relation to last year's sample.

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Definitions:

Fixed Cost Per Unit

The cost that does not change with the level of production or sales, divided by the number of units produced, to determine the fixed cost allocated to each unit.

Level Of Activity

A measure of the volume of production or work done in a specific period, often used in costing and productivity analysis.

Variable Costs

Costs that change in proportion to the good or service that a business produces, varying depending on production volume.

Per-unit Basis

A method of measurement or calculation that pertains to or is expressed in terms of a single unit of something.