You Are Using Analytical Procedures to Verify Direct Labour Costs

question 15

Multiple Choice

You are using analytical procedures to verify direct labour costs.Which of these information sources would be considered the least reliable to use to establish an expected amount?

• A)Prior year's average monthly production hours,obtained from the prior-year audit working papers.
• B)Budgeted direct labour hours from the master budget,which was approved by the Board of Directors.
• C)The production manager's personal forecast of annual production hours.
• D)Industry averages obtained directly from a verified government website.

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Definitions:

Mean

The average value in a set of numbers, calculated by dividing the sum of all values by the number of values.

Prove Observations

The process of validating or verifying observed phenomena through repeated testing or experimental confirmation.

Interpret Observations

The process of explaining or finding the meaning in the data, actions, or events that one notices or records.

Summarise Observations

The process of briefly describing the main points or significant details noted during an examination or study.