Auditing Standard #5 Requires

question 45

Multiple Choice

Auditing Standard #5 requires:

• A) auditors perform tests of internal control.
• B) auditors have technical competence to perform audits.
• C) auditors exercise professional skepticism.
• D) Both b and c

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Definitions:

Variable Manufacturing Overhead

Costs that vary with production volume, such as indirect materials and utilities, related specifically to the manufacturing process.

Labor-Hours

The total number of working hours clocked by employees within a specific period, reflecting the labor input.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual units of output on the basis of some common activity, such as machine-hours or labor hours.

Labor Cost

The total expense incurred by a company for the compensation of its employees.