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what is in red is my partCase 13-36 – Mt. Hood Furniture—PPS Sampling ProblemIdentify the audit objectives that are accomplished by this test. 2. Determine sample size based on the following audit judgments. a. Tolerable misstatement is assessed at $325,000.b. The risk of incorrect acceptance is assessed at 37 percent.c. Anticipated misstatement is assessed at $100,000.3. Develop a scenario that is consistent with setting the risk of incorrect acceptance at 37percent. 4. Select a PPS sample of the above inventory population using the sample size determinedin (2) above. 5. Explain the tests that you would perform to test the correctness of pricing of raw materials,work in progress, and finished goods. (The student may wish to consult Chapter 16.) 6. Determine the amount of projected population misstatement based on your sample. 7. Considering your quantitative and qualitative results, develop a statistical conclusionand an audit conclusion based on your sample.
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