You desire to estimate the amount of the inventory of your client Jackson Industries, Inc. You satisfied yourself earlier as to the inventory quantities. During the audit of the pricing and extension of the inventory, the following data were gathered using random sampling with replacement.

• Total items in inventory 20,000
• Total items in sample 600
• Total audited value of items in sample $40,400.

Required:

a. According to the sample results, what is the estimate of the total value of the inventory using mean estimation? Show computations. (6 pts)

b. Independent of your answer to part (a), assume the book value of Draper's inventory is $1,700,000 and on the basis of the sample results, the estimated total value of the inventory is $1,900,000. The tolerable misstatement is $15,000, and the achieved allowance for sampling risk is $8,000. What will the auditors conclusion be? Show all calculations and explain clearly what the auditor (12 pts