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Exam IIA-CIA-Part3 All Questions

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Exam IIA-CIA-Part3 topic 1 question 13 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 13
Topic #: 1
[All IIA-CIA-Part3 Questions]

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.
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Suggested Answer: D 🗳️

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John1237
11 months, 3 weeks ago
Volume is a more qualitative criteria.
upvoted 1 times
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koziolmutant
2 years, 8 months ago
all answers, except for D, point to real values of losses/understated costs, so malfunctions in the cost accounting system.
upvoted 2 times
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AKKR
2 years, 8 months ago
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.
upvoted 3 times
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Shars
2 years, 9 months ago
I agree with JOcia
upvoted 1 times
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JOcia
2 years, 11 months ago
I agree with D. I would say A,B and C relates to errors in the existing system?
upvoted 2 times
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PioGor9618
2 years, 11 months ago
Appreciate justification why D is correct. Thanks
upvoted 1 times
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