13-36 (Mt. Hood FurniturePPS sampling problem) You have been assigned the task of testing the accuracy of the final inventory compilation for Mt….

13-36 (Mt. Hood Furniture—PPS sampling problem) You have been assigned the task of testing the accuracy of the final inventory compilation for Mt. Hood Furniture. You may assumethat you have separately observed the inventory and that you are satisfied that the inventory was accurately counted. However, you need to test that quantities were accuratelytranscribed to the final accumulation and valuation of inventory and that the inventory is correctly priced and accumulated. The table beginning on page 617 presents the auditedvalues associated with Mt. Hood’s pricing and accumulation of all items in inventory. The book values will be given to you by your professor. You may assume that you haveperformed the tests to determine the proper pricing for raw materials, work in process, and finished goods. The student should understand that the auditor will normally obtain thisinformation only for the items included in the sample.Required3. Develop a scenario that is consistent with setting the risk of incorrect acceptance at 37 percent.

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