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		Analytical Procedure			Comments & Actions
Account	P/Y	C/Y	Dollar	%
			Change	Change
Sales	9,000,000	9,720,000
GOGS	6,296,000	7,000,000
Gross Margin	2,704,000	2,720,000
Gross Margin %	30%	28%
General Expense	2,044,000	2,003,000
Depreciation	300,000	334,000
OI	360,000	383,000
Interest Expense	60,000	75,000
Income Taxes	120,000	123,200
Net Income	180,000	184,400
Accounts receivable	500,000	900,000
Allowance for Doubtful	40,000	90,000
% of Allowance	8%	10%
Inventory	1,500,000	1,350,000
Fixed Assets	3,000,000	4,500,000
Accum Depreciation	1,500,000	1,834,000
As % of Fixed Asset	50%	41%
Bank Loans 8%	0	1,750,000
Accured Interest	60,000	40,000
LT DEBT	600,000	400,000
Notes:
1. Forecast/budget for Sales C/Y was
$9,900,000. Actual less than expected due
to liberal returns policy in the C/Y
2. The 8% loan went into affect 7/1
3. New facilities $1,500,000 place in service
7/1. Straigh line depreciation 25 years.
Required:
1. Decide what dollar amount and % change is material and worthy of further investigation.
2. Are there any reported expenses that appear to be incorrect?
3. What questions would you ask management.