Which of the Following Is Most Correct with Respect to the Use

question 35

Multiple Choice

Which of the following is most correct with respect to the use of analytical procedures?

• A)Analytical procedures may be used in evaluating balances in the testing phase as long as the auditor also uses them in assessing the going concern assumption.
• B)Analytical procedures must be used throughout the audit.
• C)Analytical procedures used in the testing phase of the audit are primarily used to direct an auditor's attention so that the auditor's understanding of the business is improved.
• D)Analytical procedures are performed by studying plausible relationships between financial and nonfinancial data.

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Definitions:

Direct Labor-Hours

The total hours of labor directly involved in the production of goods or services, often used as a basis for allocating labor costs to products.

Variable Manufacturing Overhead

Indirect manufacturing costs that fluctuate with production volume, such as utilities and maintenance expenses.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected cost of direct materials, based on standard cost.