Assume that you are auditing the inventory of Husky Manufacturing Company for the year ended December 31, 2013, and you are using MUS. The book value is $8,124,998.66. The risk of incorrect acceptance is 10% (90% confidence level). The tolerable misstatement is $275,000, and expected misstatement is $80,000, so the ratio of expected misstatement to tolerable misstatement is 29%. The ratio of tolerable misstatement to the population book value is 4.3%.

a. Calculate the sample size and the sampling interval.

b. Calculate the total estimated misstatement assuming the following misstatements were found in the sample:

Book Value Audit Value

$41,906.45 ....... $36,906.45

$335,643.28 .......$333,643.28

What conclusion do you reach based upon your calculation?