Which of the following engagement observations would provide the least motivation for management to amend or replace an existing cost accounting system?
A) The distorted unit cost of a service is 50 percent lower than the true cost, while the true cost is 50 percent higher than the competition's cost.
B) The organization is losing $1,000,000 annually because it incorrectly outsourced an operation based on information from its current system.
C) The cost of rework, hidden by the current system, is 50 percent of the total cost of all services.
D) 50 percent of total organizational cost has been allocated on a volume basis.

Question

Quizplus · Accepted Answer

Allocating costs on a volume basis is a common practice and may not necessarily indicate a problem with the cost accounting system, unlike the other options which highlight significant financial impacts or inaccuracies.

Which of the Following Engagement Observations Would Provide the Least