You are auditing payroll for the

Cast IronCast Iron

Technologies company for the year ended October 31,

20162016.

Included next are amounts from theclient's trial balance, along with comparative audited information for the prior year.

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(Click the icon to view the amounts from the trial balance.)

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(Click the icon to view the additional information.)

Requirements

a.	Use the final balances for the prior year and the information in items 1 through 5 to develop an expected value for each account, except sales. (Round to the nearest whole dollar.)
b.	Calculate the difference between your expectation and the client's recorded amount as a percentage using the formula (expected value-recorded amount)/expected value. (Round to the nearest hundredth percent, X.XX%.)

(Note 1: When computing the expected value of factory hourly payroll, you must take into consideration both the

44%

wage increase and the

66%

increase in the number of units produced and sold. Note 2: Use the increase in the

10/31/20162016

preliminary sales balance over the

10/31/20152015

audited sales balance to determine the expected value for sales commissions on

10/31/20162016.)

		Requirement a.
	(A)	(B)
	Preliminary Balance	Expected Value
	10/31/2016	10/31/2016
Executive salaries	649,215
Factory hourly payroll (see Note 1)	11,597,899
Factory supervisors' salaries	797,096
Office salaries	2,694,881
Sales commissions (see Note 2)	2,395,881

	Audited Balance	Preliminary Balance
	10/31/15	10/31/16
Sales*	$55,934,900	$60,969,041
Executive salaries	544,881	649,215
Factory hourly payroll	9,284,511	11,597,899
Factory supervisors' salaries	729,582	797,096
Office salaries	2,239,582	2,694,881
Sales commissions	2,798,321	2,395,881
*Sales have increased 9% over prior year. 3% percent of that is due to an increase in the average selling price. The remaining 6% is attributed to an increase in the number of units sold.

You have obtained the following information to help you perform preliminary analytical procedures for the payroll account balances.

1.	There has been a significant increase in the demand for Cast IronCast Iron's products. The increase in sales was due to both an increase in the average selling price of threethree percent and an increase in units sold that resulted from the increased demand and an increased marketing effort.
2.	Even though sales volume increased there was no addition of executives, factory supervisors, or office personnel.
3.	All employees including executives, but excluding commission salespeople, received a fourfour percent salary increase starting November 1, 20152015. Commission salespeople receive their increased compensation through the increase in sales.
4.	The increased number of factory hourly employees was accomplished by recalling employees that had been laid off. They receive the same wage rate as existing employees. Cast IronCast Iron does not permit overtime.
5.	Commission salespeople receive a sevenseven percent commission on all sales on which a commission is given. Approximately 6060 percent of sales earn sales commission. The other 4040 percent are "call-ins," for which no commission is given. Commissions are paid in the month following the month they are earned.

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