G.69Sample Size Determination: Classical Variables Sampling. The recorded inventory balance for Faulk Company was $1,000,000 and comprised 2,500 customer accounts.

Required:

For each of the following independent sets of conditions, determine the appropriate sample size for the audit of Faulk's inventory using classical variables sampling (mean-per-unit estimation). Based on the differences in your calculations, identify the general relationship between different factors and sample size. (RIA = risk of incorrect acceptance, RIR = risk of incorrect rejection, TM = tolerable misstatement, EM = expected misstatement, SD = standard deviation.)

1. RIA = 5%, RIR = 5%, TM = $50,000, EM = $20,000, SD = $40.
2. RIA = 10%, RIR = 5%, TM = $50,000, EM = $20,000, SD = $40.
3. RIA = 10%, RIR = 10%, TM = $50,000, EM = $20,000, SD = $40.
4. RIA = 5%, RIR = 5%, TM = $30,000, EM = $20,000, SD = $40.
5. RIA = 5%, RIR = 5%, TM = $50,000, EM = $10,000, SD = $40.
6. RIA = 5%, RIR = 5%, TM = $50,000, EM = $10,000, SD = $30.