When using cost-volume-profit analysis, which of the following will increase operating income once the break-even point has been reached?
Correct Answer:C
Contribution Margin: Contribution margin is the amount by which the sales price of a product exceeds its variable costs. After reaching the break-even point, each additional unit sold contributes directly to operating income.
: Cost-volume-profit (CVP) analysis, which highlights the role of contribution margin in
determining profitability.
Operating Income: At the break-even point, fixed costs are covered, so additional units sold increase operating income by the contribution margin per unit.
Fixed Costs: Fixed costs per unit (option A) do not change with additional units sold.
Variable Costs: Variable costs per unit (option B) remain constant and are deducted from sales price to calculate contribution margin.
Gross Margin: Gross margin per unit (option D) includes fixed costs and is less directly relevant than the contribution margin.
The board of directors of a global organization has found an increased number of reported cases of unethical practices since last year. To assist the board in gaining a better understanding of the degree of ethics awareness within the organization, which of the following actions should be undertaken?
Correct Answer:D
To assist the board of directors in understanding the degree of ethics awareness within the organization, an organization-wide employee survey on ethical practices (option D) is the most effective action. Here's why:
✑ Direct Insight from Employees: Surveys can capture the perspectives of a broad
employee base, providing direct insights into the awareness and attitudes towards ethics within the organization.
✑ Quantitative and Qualitative Data: A well-designed survey can gather both
quantitative data (e.g., percentage of employees aware of the code of ethics) and qualitative data (e.g., specific instances of ethical dilemmas faced by employees).
✑ Identifying Areas of Improvement: Surveys can identify specific areas where
employees feel the organization is lacking in terms of ethical practices, which can guide targeted improvements.
✑ Confidentiality and Anonymity: Surveys often ensure confidentiality and anonymity,
encouraging more honest and comprehensive responses from employees, which might not be achievable through other means.
✑ Comprehensive Scope: Compared to internal audits or training, surveys can
provide a comprehensive overview of the entire organization??s ethical climate, from various departments and levels.
This approach aligns with the best practices in internal auditing and organizational
assessments as outlined by the Institute of Internal Auditors (IIA) and other related guidance.
Operational management In the IT department has developed key performance indicator reports, which are reviewed in detail during monthly staff meetings. This activity is designed to prevent which of the following conditions?
Correct Answer:B
Key performance indicator (KPI) reports are essential tools for tracking and evaluating the performance of various processes and activities within an organization. By reviewing these reports in detail during monthly staff meetings, operational management in the IT department aims to identify any discrepancies or issues promptly. This continuous monitoring helps to prevent a "monitoring gap," which is the failure to adequately oversee and assess operations, potentially leading to undetected problems or inefficiencies
According to ISO 31000, which of the following statements is correct?
Correct Answer:D
According to ISO 31000, the risk management framework is scalable and applicable to organizations of all sizes, including small entities. The framework's principles are designed to be flexible and adaptable, ensuring they can be effectively implemented regardless of the organization's size.
✑ Scalability: The principles and guidelines of ISO 31000 can be tailored to fit the
specific context, resources, and complexity of any organization, making it a universal standard.
✑ Flexibility: The framework supports organizations in integrating risk management
practices into their operations at a level that suits their size and complexity.
✑ Effectiveness: Regardless of the organization's size, the framework aims to enhance risk management practices and support better decision-making.
References:
✑ "ISO 31000: Risk Management Guidelines," which outlines the applicability and flexibility of the framework for all organizations .
A corporate merger decision prompts the chief audit executive (CAE) to propose interm
changes to the existing annual audit plan to account for emerging risks Which of the following Is the most appropriate action for the CAE to take regarding the changes made to the audit plan?
Correct Answer:D
Role of the CAE: The Chief Audit Executive (CAE) is responsible for developing a risk- based audit plan and ensuring it is aligned with the organization??s goals and emerging risks. Significant changes to the audit plan must be communicated appropriately within the organization.
IIA Standards:
✑ Standard 2020 – Communication and Approval: The CAE must communicate the internal audit plan and resource requirements, including significant interim changes, to senior management and the board for review and approval.
✑ Risk Assessment: Any changes to the audit plan due to emerging risks, such as a corporate merger, must be documented and approved at the highest levels to ensure comprehensive risk coverage.
Most Appropriate Action:
✑ Communication with the CEO: The CAE should first discuss the revised audit plan with the CEO to ensure alignment with executive management??s perspective on emerging risks.
✑ Board Approval: After discussing with the CEO, the CAE should present the revised audit plan to the board for formal approval, ensuring transparency and governance.
References:
✑ Presenting the revised audit plan to the board after discussing with the CEO ensures that all relevant stakeholders are informed and that the revised plan is formally approved, maintaining alignment with IIA standards.