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?

  • CreatedJanuary 21, 2015
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