Because a client does not maintain perpetual records, an auditor elects to use mean- per-unit estimation to determine whether ending inventory is fairly stated. The follow- ing data are available:

After sample size is determined and sampling units are selected and examined, the auditor compiles the following results:

Required: 

1. From the information available, what is the auditor's desired allowance for sampling risk?

2. Calculate sample size.

3. Determine the estimated population value.

4. Calculate the achieved allowance for sampling risk.

5. Determine the precision interval.
6. State a statistical conclusion.

Transcribed Image Text:

Acceptable risk of incorrect rejection Acceptable risk of incorrect acceptance Estimated population standard deviation Tolerable error Population size -.05 = .20 $70 $25,000 1,800