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CMA Final · Cost and Management Audit · Management Audit in Different Functions

In auditing the marketing function, a management auditor wants to assess whether selling effort is being allocated efficiently across territories. Which measure is most appropriate?

The most appropriate measure is sales and marketing cost per territory compared with the contribution that territory generates. This links selling effort to results by area. Factory overhead ratios, material price variances and finished goods inventory turnover do not show how selling effort is distributed.

  1. ARatio of administrative overhead to total factory cost
  2. BSales and marketing cost per territory compared with sales contribution generated by that territoryCorrect
  3. CRaw material price variance for the year
  4. DInventory turnover of finished goods only

Explanation

Efficiency of effort allocation across territories is judged by comparing marketing cost incurred with the contribution each territory produces. The other measures relate to administration, purchasing or inventory and do not link effort to results by territory.

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