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.

Question

Quizplus · Accepted Answer

The production manager's personal forecast may not be based on reliable or objective data and therefore may not be accurate for establishing an expected amount of direct labour costs. The other options are more reliable sources of information for establishing an expected amount.

You Are Using Analytical Procedures to Verify Direct Labour Costs