You are auditing payroll for the

Cast IronCast Iron

Technologies company for the year ended October? 31,

20162016.

Included next are amounts from the?client's trial? balance,along with comparative audited information for the prior year.

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?(Click the icon to view the amounts from the trial?balance.)                        

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?(Click the icon to view the additional? information.)

Requirements

a.	Use the final balances for the prior year and the information initems 1 through 5 to develop an expected value for each? account,except sales.? (Round to the nearest whole? dollar.)
b.	Calculate the difference between your expectation and the?client's recorded amount as a percentage using the formula?(expected value-recorded? amount)/expected value. ?(Round to thenearest hundredth? percent, X.XX%.)

?(Note 1: When computing the expected value of factory hourly?payroll, you must take into consideration both the

44?%

wage increase and the

66?%

increase in the number of units produced and sold. Note? 2: Usethe increase in the

?10/31/20162016

preliminary sales balance over the

?10/31/20152015

audited sales balance to determine the expected value for salescommissions on

?10/31/20162016?.)

		Requirement a.
	(A)	(B)
	Preliminary Balance	Expected Value
	10/31/2016	10/31/2016
Executive salaries	649,215
Factory hourly payroll (see Note 1)	11,597,899
Factory supervisors' salaries	797,096
Office salaries	2,694,881
Sales commissions (see Note 2)	2,395,881

	Audited Balance	Preliminary Balance
	10/31/15	10/31/16
Sales*	$55,934,900	$60,969,041
Executive salaries	544,881	649,215
Factory hourly payroll	9,284,511	11,597,899
Factory supervisors' salaries	729,582	797,096
Office salaries	2,239,582	2,694,881
Sales commissions	2,798,321	2,395,881
*Sales haveincreased 9% over prior year. 3% percent of that is due to anincrease in the average selling price. The remaining 6% isattributed to an increase in the number of units sold.

You have obtained the following information to help you performpreliminary analytical procedures for the payroll accountbalances.

1.	There has been a significant increase in the demand for Cast IronCast Iron?'s products. The increase in sales was due to both an increase in theaverage selling price of threethree percent and an increase in units sold that resulted from theincreased demand and an increased marketing effort.
2.	Even though sales volume increased there was no addition of?executives, factory? supervisors, or office personnel.
3.	All employees including? executives, but excluding commission?salespeople, received a fourfour percent salary increase starting November? 1, 20152015. Commission salespeople receive their increased compensation throughthe increase in sales.
4.	The increased number of factory hourly employees wasaccomplished by recalling employees that had been laid off. Theyreceive the same wage rate as existing employees. Cast IronCast Iron does not permit overtime.
5.	Commission salespeople receive a sevenseven percent commission on all sales on which a commission is given.Approximately 6060 percent of sales earn sales commission. The other 4040 percent are? "call-ins," for which no commission is given.Commissions are paid in the month following the month they areearned.

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