Tuesday 20 November 2012

1. The probability of a significant idle capacity loss increases under which of the following conditions? • The client has increased its overhead absorption rate effective at the beginning of the following accounting period. • Sales and production have increased significantly during the period under audit. • Sales and production have declined materially during the period under audit. • Sales and production have declined somewhat, but production has remained constant in anticipation of a sales recovery in the following accounting period.

1.      The probability of a significant idle capacity loss increases under which of the following conditions?

·        The client has increased its overhead absorption rate effective at the beginning of the following accounting period.

·        Sales and production have increased significantly during the period under audit.

·         Sales and production have declined materially during the period under audit.

·        Sales and production have declined somewhat, but production has remained constant in anticipation of a sales recovery in the following accounting period.



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