Your client is a manufacturer of handheld tools that employs a sales force to market the tools to retail hardware stores. You plan to use substantive analytical procedures to gather persuasive evidence about the reasonableness of commissions expense. The visualization titled "Average Commission Rate per Customer" has sales and commissions expense data. You can determine whether the relationship between commissions and sales makes sense. If it does, that suggests that commissions expense is fairly stated.

The commission policy of the client is as follows:

For sales greater than $75,000, commission is 3.75%

For sales greater than $50,000, but less than $75,000, commission is 2.5%

For sales greater than $25,000, but less than $50,000, commission is 1.25%

For sales less than $25,000, commission is 0.5%

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Using the visualization titled "Relationship between Sales and Commissions," what do you think about the reasonableness of commissions expense?

Commissions expense is likely understated, because the blue like peaks above the orange line a couple of times.

There is not enough information to make a determination.

Commissions expense is likely overstated, because the orange line is above the blue line in many cases.

Commissions expense appears fairly stated, as it tracks in a reasonable pattern by day with revenue.