Question: Magnolia Snook and Associates CPAs has been engaged by the

Magnolia Snook and Associates, CPAs, has been engaged by the Dobson Fabrication Company to apply agreed upon procedures to forecast assumptions with respect to a new labor contract for 2011. The current labor contract at Dobson will expire on August 31, 2011, and the new contract is expected to result in a 3.5% wage increase. As a result of forecasting production and sales levels, after-tax earnings is expected to be reduced by about $75,000 for each percentage point in wage increase concessions in excess of the expected contract.

What evidence sources and agreed-upon procedures might Magnolia Snook & Associates and Dobson Fabrication Company specify as appropriate if the company’s intent is to investigate the reasonableness of the assumptions upon which forecasted information is derived?

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  • CreatedJanuary 21, 2015
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