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ACCA Applied Knowledge · Management Accounting · Sampling methods

A company with 40 depots across a country wants to check inventory record accuracy. It randomly selects 4 depots and checks all records at each of them. Which statement about this cluster sampling approach is correct?

Cluster sampling lowers cost and travel and needs only a list of depots, but it tends to have higher sampling error when depots differ from one another. It is generally less precise than simple random sampling of the same size.

  1. AIt gives lower cost and travel, but higher sampling error if depots differ from each otherCorrect
  2. BIt always gives more precise results than simple random sampling
  3. CIt requires a full list of every inventory item in the country
  4. DIt guarantees every item has an equal chance and no bias

Explanation

Cluster sampling reduces cost and travel and needs only a list of clusters, not every item. However, if clusters differ from each other, the sample may not represent the population, so error is typically higher than with simple random sampling of the same size.

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