To maximize profit with a limited material supply of 500 kg per month, the company should prioritize producing the product that generates the highest contribution margin per kg of material used.
Step 1: Calculate Contribution Margin Per Unit for Each ProductSince fixed costs are not relevant in this decision, we focus on the contribution margin per unit of raw material:
Selling price per unit = $10
Material cost per unit = 2 kg × $1/kg = $2
Contribution margin per unit = $10 - $2 = $8
Contribution margin per kg = $8 ÷ 2 kg = $4 per kg
Selling price per unit = $13
Material cost per unit = 6 kg × $1/kg = $6
Contribution margin per unit = $13 - $6 = $7
Contribution margin per kg = $7 ÷ 6 kg = $1.17 per kg
Product X ($4 per kg) is more profitable per kg than Product Y ($1.17 per kg).
To maximize profit, produce as many units of Product X as possible first, then allocate the remaining material to Product Y.
First, maximize production of Product X
Each unit of Product X requires 2 kg.
Maximum units of Product X = 500 kg ÷ 2 kg per unit = 250 units.
However, demand is only 70 units, so produce 70 units of Product X.
Material used for 70 units of X = 70 × 2 kg = 140 kg.
Material remaining = 500 kg - 140 kg = 360 kg.
Use remaining material for Product Y
Each unit of Product Y requires 6 kg.
Maximum units of Product Y = 360 kg ÷ 6 kg per unit = 60 units.
Produce 70 units of Product X (to meet demand).
Produce 60 units of Product Y (using the remaining material).
IIA GTAG 13: Business Performance Management - Discusses maximizing profit by prioritizing high contribution margin products.
IIA Practice Guide: Cost Analysis for Decision-Making - Covers constraints and resource allocation for maximizing profitability.
Product XProduct YStep 2: Prioritize Product with Higher Contribution Margin Per KgStep 3: Allocate Limited Material (500 kg)Final Decision:IIA References for Validation:Thus, B (60 units) is the correct answer because it optimally allocates the 500 kg of material to maximize profit.

The CAE should remain aware of emerging risks through ongoing communication and collaboration with senior management and other stakeholders. Building strong relationships allows the CAE to obtain early insights into new and developing risks.
Option B (building a risk management process) is management's responsibility, not internal audit's. Options C and D involve reviewing processes, but they do not directly expose the CAE to emerging risks in real time.
Reference:
IIA Standards - Standard 2010: Planning; Practice Guide - Developing a Risk-based Internal Audit Plan.

Comprehensive and Detailed In-Depth Explanation:
Under the variable costing method, only costs that vary directly with production volume are treated as product costs. This includes direct labor costs (the wages of employees directly involved in manufacturing) and manufacturing supplies (materials consumed during production). Insurance on a factory is a fixed overhead cost, and packaging and shipping costs are typically considered period costs or selling expenses, as they are incurred after production. Therefore, options 1 and 3 correctly represent product costs under variable costing.

Audit observations should include condition, criteria, cause, and effect. In this case, the condition (delay risk), criteria (schedule), and effect (penalties) are already presented. What is missing is the cause-the underlying reason for the project delay. Identifying the cause ensures recommendations address the root of the problem.
Reference:
IIA Practice Guide - Audit Findings: Condition, Criteria, Cause, Effect, and Recommendation.

Decreased employee productivity after data loss is most directly caused by lack of data backup. If business data stored or accessed through mobile devices is lost and cannot be restored, employees may need to recreate work, delay tasks, repeat transactions, or wait for recovery. Malware, sensitive data exposure, and lack of encryption are serious security and privacy concerns, but they do not directly explain productivity loss from unrecoverable data. Backup controls support availability and recovery by ensuring data can be restored after deletion, corruption, device theft, or system failure. Internal auditors should evaluate mobile backup requirements, synchronization, cloud storage controls, recovery testing, encryption, and incident response.
Therefore, Option D is correct.