Engagement Letters Issued to New Clients Do Not Specify the Amount

question 94

True/False

Engagement letters issued to new clients do not specify the amount of audit fees to be charged because fees cannot be determined until the audit has been completed.

---

Definitions:

Labour Efficiency Variance

The difference between the actual labor hours used and the standard labor hours expected for the level of production achieved, often indicating productivity levels.

Variable Overhead

Costs that vary with the level of production output, such as utilities for a manufacturing plant, which increase with more production.

Labour Rate Variance

The difference between the actual cost of labor and its expected cost based on standards set for production.

Labour Efficiency Variance

The difference between the actual labor hours used in production and the standard hours expected, multiplied by the standard labor rate.