Show me the steps to solve You are auditing payroll for the Morehead Technologies You have obtained the following information to help you perform preliminary analytical procedures

for the payroll account balances.

Additional information not included in textbook: Performance materiality is set to $$150,000.$ If the

variance calculated exceeds $$150,000$ and a $10\%$ change, identify if further investigation is required.

There has been a significant increase in the demand for Morehead's products. The increase in sales was

due to both an increase in the average selling price of $4$ percent and an increase in units sold that resulted

from the increased demand and an increased marketing effort.

Even though sales volume increased, there was no addition of executives, factory supervisors, or office

personnel.

All employees, including executives but excluding commission salespeople, received a $3$ percent salary

increase starting November $1,2020.$ Commission salespeople receive their increased compensation

through the increase in sales.

The increase in the number of factory hourly employees was accomplished by recalling employees that

had been laid off. They receive the same wage rate as existing employees. Morehead does not permit

overtime.

Commission salespeople receive a $5$ percent commission on all sales on which a commission is given.

Approximately $75$ percent of sales earn sales commission. The other $25$ percent are "call$-$ins," for which no

commission is given. Commissions are paid in the month following the month they are earned. Required

a$.$ Use the final balances for the prior year included above and the information in Items $1-5$ to develop an

expected value for each account, except sales.

b$.$ Calculate the difference between your expectation and the client's recorded amount as a percentage

using the following formula.

company for the year ended October $31,2020.$ Included next

are amounts from the client's trial balance, along with

comparative audited information for the prior year.