Which of the following engagement observations would provide the least motivation for management to amend or replace an existing cost accounting system?
Which of the following engagement observations would provide the least motivation for management to amend or replace an existing cost accounting system?
Option D reflects a situation where a chosen method of cost allocation (volume-based) might not necessarily indicate a critical error or a malfunction in the cost accounting system. While it may not be the most accurate method for all circumstances, it does not demonstrate a clear monetary loss or competitive disadvantage as the other options do. Management might see less urgency in changing the system based solely on the allocation method, unlike the significant financial losses and competitive issues presented in options A, B, and C.
D, because it does not really matter how do you allocate costs in longer terms and you have to choose one of the methods anyway.
all answers, except for D, point to real values of losses/understated costs, so malfunctions in the cost accounting system.
I agree with D. I would say A,B and C relates to errors in the existing system?
Volume is a more qualitative criteria.
I agree with JOcia
Appreciate justification why D is correct. Thanks