Juanita Conducted a Value-Added Analysis of Costs Incurred in Her

question 60

Essay

Juanita conducted a value-added analysis of costs incurred in her company's internal auditing department; results of her analysis are shown below. Group the activities based on a three-point scale, where "3" stands for activities with very high value and "1" stands for activities with very low value. Then, compute the percentage of costs in each category, recording your answers in the space provided. $\begin{array}{lr} \text {Investigating reports of fraud } &\$ \quad4,955 \\ \text { Training new employees } &4,283\\ \text {Participating in continuing education } &3,818\\ \text { Explaining the role and purpose of intemal audit} &2,854\\ \text { Assisting extemal auditors } &2,598\\ \text { Correcting emors in the accounting information system} &2,495\\ \text { Evaluating employees } &1,318\\ \text { Drawing flowcharts} &1,064\\ \text { Inspecting finished products for quality } &918\\\end{array}$
Percent of costs ranked "3" ______
Percent of costs ranked "2" ______
Percent of costs ranked "1" ______

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Definitions:

Management Fees

These are fees paid to managers for their role in operating an investment fund, usually expressed as a percentage of assets under management.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.

Unbiased Forward Rate

An estimate of future spot interest rates implied by current interest rates, under the assumption that the forward rates are an unbiased predictor of future spot rates.

Future Spot Rate

The anticipated price of an asset at a future date in a spot transaction, which involves the immediate settlement of the transaction.