Walker Bat Company is a private company that manufactures a line of high-end baseball bats. They have been in business 25 years and have a reputation in the industry for high-quality products and excellent customer service. Sales are made only to wholesalers or larger retail stores. You are conducting the audit. At year-end, the company had a total of $6.3 million in assets. Inventory information is: Raw materials (indirect material Raw materials (wood products) Work in progress Finished goods Finished goods consists of: Material Direct labour Overhead $ 400 000 450 000 1 350 000 250 000 $2 450 000 48% 22 30 100% The bat industry is very competitive, primarily due to imports from Asia and Europe. To help manage costs, Walker uses a job-order, standard cost system. Standard costs are assessed quarterly. Each job is costed and compared to the standard. The periodic inventory system is used, so inventory is counted only at year-end. Due to problems with raw material quality and new staff, losses have been incurred in the last six months of the year. Your review of last year's audit file indicated that there were numerous inventory adjustments required last year.