An Important Statistic to Consider When Using a Statistical Sampling

question 10

Multiple Choice

An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the:

• A) Sample mean.
• B) Standard deviation.
• C) Standard error of the sample mean.
• D) Estimated population total minus the actual population total.

---

Definitions:

Absorption Costing

A method of accounting that encompasses all costs associated with manufacturing, including direct materials, direct labor, as well as both variable and fixed overhead expenses, as part of a product's cost.

Fixed Costs

Regularly occurring costs that remain constant in total, irrespective of changes in operational levels or volume of output.

Variable Costs

Costs that change in direct proportion with the level of output or activity of a business.

Underapplied Overhead

occurs when the allocated manufacturing overhead cost is less than the actual overhead incurred, leading to a discrepancy.