Due to data errors occurring from time to time in processing the Albert Company's payroll, the company's management is considering the addition of a data validation control procedure that is projected to reduce the risk of these data errors from 13% to 2%. The cost of the payroll reprocessing is estimated to be $11,000. The cost of implementing the data validation control procedure is expected to be $700. Which of the following statements is true?
A) The data validation control procedure should be implemented because its net estimated benefit is $510.
B) The data validation control procedure should be implemented because its cost of $700 is less than the payroll reprocessing cost of $1,430.
C) The data validation control procedure should not be implemented because its cost of $700 exceeds the expected benefit by $480.
D) The data validation control procedure should not be implemented because its net estimated benefit is a negative $1,210.
Answer: A) The data validation control procedure should be implemented because its net estimated benefit is $510.
You might also like to view...
Building a customer database is not recommended when the product is a once-in-a-lifetime purchase
Indicate whether the statement is true or false
Which one of the following is not a recommended technique participating in a webcam interview?
A) Create an uncluttered area around your computer. B) Place a bright light behind your back. C) Dress as if you were having an in-person interview. D) Place your face about six inches from the computer screen.