Determine Cost/Benefit Effectivenes

Determine Cost/Benefit Effectiveness
After estimating benefits and costs, management determines if the control is cost beneficial. For example, at Atlantic Richfield data errors occasionally required an entire payroll to be reprocessed at a cost of $10,000. Management determined that a data validation step would reduce the likelihood of this event from 15% to 1%. at a cost of S600 per pay period. The cost/benefit analysis that management used to determine if the validation step should be employed is shown in
Table 6-3