In preparing for an audit of the retail footwear division of a major retail organization, the auditor gathered the following information about the organization's stores: Average sales per store Average cost of goods sold per store Number of stores Average square feet per store Average sales per full-time employee Average wage related expense per store Average net profit contribution per store All Stores $ 736,000 $375,000 48 1,800 $ 137,000 $ 98,000 $ 238,000 Northeast Region $ 840,000 420,000 13 2,200 $152,000 $ 102,000 $ 285,000 Southwest Region $760,000 $325,000 18 1,850 $ 140,000 $ 82,000 $ 320,000 Mid-Central Region $ 630,000 $ 395,000 17 1,550 $ 122,000 $ 112,000 $ 115,000 Management is concerned about the lower level of profitability in the Mid-Central Region. Which of the following would be a reasonable possible explanation(s) of the lower profitability for the Mid-Central Region? 1. The lower number of stores in the Mid-Central Region II. Sales employees are not as productive in generating sales as those in other regions. III. The Mid-Central Region has a lower gross margin. Multiple Choice il and ill only Ill and I only 1 only Which of the following statements is not correct regarding the auditor's further analysis? Multiple Choice The Mid-Central Region has the highest average wages per full-time equivalent employee. The Mid-Central Region has fewer average full-time equivalent employees per store than the other regions per store The other regions all generate higher sales per square foot than the Mid-Central Region The largest contributor to total corporate profits is the Southwest Region, Management has centralized purchasing and uses a model based upon previous year's sales with adjustments for trends in the market place (e.g., the trend to more casual shoes). A staff auditor has suggested that the centralized purchasing may be one of the reasons for the lower level of profitability in the Mid-Central Region. Which of the following would be the best single audit procedure to address the staff auditor's assertion? Multiple Choice Interview store managers in the Mid-Central Region to determine their attitude toward centralized purchasing Perform an inventory count at selected stores in the Mid-Central Region and determine if adjustments are needed to the perpetual records. Perform a product-line analysis of sales and purchases in the Mid-Central Region and compare with other regions. Take a sample of receiving documents at stores and trace to purchase orders to determine the length of time between the purchase and delivery of the goods