You are auditing payroll for the Drop Line Technologies company for the year ended October 31, 2019. Included next are amounts from the client's trial balance, along with comparative audited information for the prior year. (Click the icon to view the amounts from the trial balance.) i (Click the icon to view the additional information.) Read the requirements. (Note 1: When computing the expected value of factory hourly payroll, you must take into consideration both the 7% wage increase and the 6% increase in the number of units produced and sold. Note 2: Use the increase in the 10/31/2019 preliminary sales balance over the 10/31/2018 audited sales balance to determine the expected value for sales commissions on 10/31/2019.) Requirement a. Requirement b. (2) [(2) - (1)] / (2) (1) Preliminary Balance 10/31/2019 Expected Value 10/31/2019 Difference as a Percentage Executive salaries 583,956 % 11,100,499 % Factory hourly payroll (see Note 1) Factory supervisors' salaries 760,800 % Office salaries 2,104,922 % Sales commissions (see Note 2) 3,195,884 % i - X Data Table Audited Balance 10/31/2018 Preliminary Balance 10/31/2019 Sales* $ 54,009,200 $ 59,410,120 Executive salaries 544,881 583,956 Factory hourly payroll 9,908,456 11,100,499 Factory supervisors' salaries 689,205 760,800 Office salaries 2,003,912 2,104,922 Sales commissions 1,958,300 3,195,884 *Sales have increased 10% over prior year. 4% 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. Print Done - i More Info analytical proceUUIES TOI LIIe payroll account balances. 1. There has been a significant increase in the demand for Drop Line'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. 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 7 percent salary increase starting November 1, 2018. 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. Drop Line does not permit overtime. 5. Commission salespeople receive a 10 percent commission on all sales on which a commission is given. Approximately 85 percent of sales earn sales commission. The other 15 percent are "call-ins," for which no commission is given. Commissions are paid in the month following the month they are earned. Print Done - X i 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%.) Print Done You are auditing payroll for the Drop Line Technologies company for the year ended October 31, 2019. Included next are amounts from the client's trial balance, along with comparative audited information for the prior year. (Click the icon to view the amounts from the trial balance.) i (Click the icon to view the additional information.) Read the requirements. (Note 1: When computing the expected value of factory hourly payroll, you must take into consideration both the 7% wage increase and the 6% increase in the number of units produced and sold. Note 2: Use the increase in the 10/31/2019 preliminary sales balance over the 10/31/2018 audited sales balance to determine the expected value for sales commissions on 10/31/2019.) Requirement a. Requirement b. (2) [(2) - (1)] / (2) (1) Preliminary Balance 10/31/2019 Expected Value 10/31/2019 Difference as a Percentage Executive salaries 583,956 % 11,100,499 % Factory hourly payroll (see Note 1) Factory supervisors' salaries 760,800 % Office salaries 2,104,922 % Sales commissions (see Note 2) 3,195,884 % i - X Data Table Audited Balance 10/31/2018 Preliminary Balance 10/31/2019 Sales* $ 54,009,200 $ 59,410,120 Executive salaries 544,881 583,956 Factory hourly payroll 9,908,456 11,100,499 Factory supervisors' salaries 689,205 760,800 Office salaries 2,003,912 2,104,922 Sales commissions 1,958,300 3,195,884 *Sales have increased 10% over prior year. 4% 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. Print Done - i More Info analytical proceUUIES TOI LIIe payroll account balances. 1. There has been a significant increase in the demand for Drop Line'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. 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 7 percent salary increase starting November 1, 2018. 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. Drop Line does not permit overtime. 5. Commission salespeople receive a 10 percent commission on all sales on which a commission is given. Approximately 85 percent of sales earn sales commission. The other 15 percent are "call-ins," for which no commission is given. Commissions are paid in the month following the month they are earned. Print Done - X i 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%.) Print Done