World- famous mining mogul Steve Wilsey hired the public accounting firm of Joe Wang Associates, PC, to conduct an audit of his new acquisition, Cougar Goldust, Inc. The gold inventory was scheduled to be taken on November 30. The perpetual records show only the weight of the gold in various inventory bins. Wang has decided to use a variables sampling approach (difference estimation) to determine the correct weight of the gold on hand. There are 4,000 bins in the Cougar warehouse. The bins will serve as the sampling units. Wang's desired level of confidence is 90 percent. The tolerable misstatement is set at 35,000 ounces, and the expected misstatement is 10,000 ounces. The perpetual record shows 700,000 ounces on hand.

Required:

a. Compute the preliminary sample size. The estimated standard deviation is 25 ounces.

b. Assume that Wang examined a sample of 100 bins. The following information summarizes the results of the sample data gathered by Wang:

Compute the sample results and indicate what conclusion Wang should make concerning the inventory balance.

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Difference Number Recorded ud Weight Aude DifferenceAudt Differencef Weight 440 170 25 16 174 217 97 23,600 Total 24,000 400 17,856