Refer to problem 6-26, concerning decision rules for variables sampling. Instead of using ratio estimation, the auditor is using dollar unit difference estimation. Assume that the allowable error, point estimate, and computed interval using dollar unit difference estimation are as stated in the problem.

Required :

Do parts a through d in problem 6-26.

 Problem 6-26:

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6-26. For each of the following populations concerning the valuation of raw-materials inventory, the auditor has established an allowable error for hypothesis testing using ratio estimation. The auditor has also calculated actual statistical results after the audit tests have been conducted. Point estimate of the population error Computed Allowable (Understated book precision Population ETTOT value is in parentheses) interval 123456 $50,000 $20,000 $35,000 50,000 25,000 55,000 50,000 35,000 10,000 50,000 (10,000) 30,000 50,000 (15,000) 60,000 50,000 15,000 45,000 REQUIRED: a. Show with a graph, using the appropriate decision rule, which of popula- tions 1 through 6 should be accepted as fairly stated without audit adjust- ment. b. Show with the same graph which of populations 1 through 6 cannot be made acceptable by adjusting the client's book value. c. What options does the auditor have for any sample result in part b? d. Show with the same graph as for part a, which of populations 1 through 6 should not be accepted as fairly stated but can be made fairly stated by an adjusting entry. Prepare the adjusting entry.