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IIA Business Knowledge for Internal Auditing Sample Questions (Q37-Q42):
NEW QUESTION # 37
Which of the following describes the free trade zone in an e-commerce environment?
Answer: D
NEW QUESTION # 38
Which of the following represents an inventory costing technique that can be manipulated by management to boost net income by selling units purchased at a low cost?
Answer: C
NEW QUESTION # 39
Data regarding four different products manufactured by an organization are presented as follows. Direct material and direct labor are readily available from the respective resource markets.
However, the manufacturer is limited to a maximum of 3,000 machine hours per month.
Units Produced per Machine Hour: A: 3 B: 4 C: 2 D: 3
The product that is the most profitable for the manufacturer in this situation is
Answer: C
Explanation:
Answer (B) is correct. When resources are limited, maximum profits are achieved by maximizing the dollar contribution margin per limited or constraining factor. In this situation, machine hours are the constraining factor. Product B has a contribution margin per machine hour of US $28 [A x (US $18 - $11)], which is greater than that of Product A [3 x (US $15 - $7) = US $24], Product C [2 x (US $20 - $10) = US $20], or Product D [3 x (US $25 - $16) = US $27].
NEW QUESTION # 40
Under the income approach, gross domestic product GDP) is measured as:
Answer: A
Explanation:
GDP is the total value of goods and services produced within the boundaries of a country. It may be measured using an expenditures approach or an income approach. Under the income approach. GDP equals all income derived from the production of the year's output, with an adjustment for net income earned abroad a positive or negative amount in theory). Two types of nonincome charges or allocations must be added to incomes wages, rents. interest, and profits). Depreciation reflects the consumption of Ford capital during the period. It is the part of the year's receipts that must be allocated to replace the machinery, plant. etc. used up in the production of GDP. Indirect business taxes, such as sales. Excise, and property taxes, are treated by businesses as a cost of production and form part of the total price of goods and Thus. they are not paid as wages. rents, interest, and profits.
Accordingly, GDP may be measured as the sum of consumption of fixed capital, indirect business taxes, wages, rents, interest, and profits (proprietors' income. corporate taxes, dividends. and undistributed corporate profits), with an adjustment for net income earned abroad.
NEW QUESTION # 41
A company stocks, maintains, and distributes inventory.
The company decides to add to the safety stock and expedite delivery for several product lines on a trial basis.
For the selected product lines the company will experience:
Answer: C
Explanation:
Safety stocks are amounts held in excess of forecasted demand to avoid the losses associated with stock outs. Holding safety stocks improves the level of service to customers at the expense of increased holding costs.
NEW QUESTION # 42
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