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ACCA Applied Knowledge · Management Accounting · Sampling methods

A company with 60 retail outlets in 12 regions wants to check stock-count accuracy. Travel costs are high. It randomly selects 3 regions and checks every outlet in those regions. Which statement about this method is correct?

This is cluster sampling: whole regions are randomly chosen and every outlet within them is checked. It lowers travel cost, but the sample may be less representative if the chosen regions differ from the others, which is its main disadvantage.

  1. AIt is cluster sampling, which cuts cost but may be less representative if regions differCorrect
  2. BIt is quota sampling, which is non-random and so allows no statistical inference
  3. CIt is stratified sampling, which requires sampling from every region
  4. DIt is multi-stage sampling, which checks only a few outlets per region

Explanation

Randomly selecting whole groups (regions) and examining all items within them is cluster sampling. It reduces travel and administration cost because the selected items are geographically concentrated. Its drawback is that the chosen clusters may differ from the unselected ones, so the sample may be less representative. Stratified sampling would sample from every region; multi-stage would sample only some outlets within the chosen regions.

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