You are auditing payroll for the Harbor Creek 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

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Part 1

(Note 1: When computing the expected value of factory hourly payroll, you must take into consideration both the 7% wage increase and the 13% 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 on10/31/2019.)

		Requirement a.	Requirement b.
	(1)	(2)	[(2) - (1)] / (2)
	Preliminary Balance 10/31/2019	Expected Value 10/31/2019	Difference as a Percentage
Executive salaries	650,381			%
Factory hourly payroll (see Note 1)	11,210,049			%
Factory supervisors' salaries	797,096			%
Office salaries	2,230,599			%
Sales commissions (see Note 2)	3,059,893			%

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%.)

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 Harbor Creek's products. The increase in sales was due to both an increase in the average selling price of 3 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. Harbor Creek does not permit overtime.
5.	Commission salespeople receive a 4 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.

Audited Balance 10/31/2018

Preliminary Balance 10/31/2019

Sales*

$56,038,100

$65,004,196

Executive salaries

529,481

650,381

Factory hourly payroll

10,603,817

11,210,049

Factory supervisors' salaries

689,205

797,096

Office salaries

1,867,433

2,230,599

Sales commissions

2,829,581

3,059,893

*Sales have increased 16% over prior year. 3% percent of that is due to an increase in the average selling price. The remaining 13% is attributed to an increase in the number of units sold.