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13.13-the Goochland Company manufactures various types of clothing products for women. To accumulate the costs of manufacturing these products, the companyâ€™s accountants have established a computerized cost accounting system. Every Monday morning, the prior weekâ€™s production cost data are batched together and processed. One of the outputs of this processing function is a production cost report for management focuses on the significant variances as the basis for analyzing production performance.
Errors sometimes occur in processing a weekâ€™s production cost of the reprocessing work on a weekâ€™s production cost data is estimated to average about $12,000. The companyâ€™s management is currently considering the addition of a data validation control procedure within its cost accounting system that is estimated to reduce the risk of the data errors from 16% to 2% and this procedure is projected to cost $800/week.
Using these data perform a cost benefit analysis of the data validation control procedure that management is considering for its cost accounting system.
b. based on your analysis, make a recommendation to management to management regarding the data validation control procedure.
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