You Are Auditing Payroll For The Morehead Technologies Company For The Year Ended Oc 2689087

You are auditing payroll for the Morehead Technologies company for the year ended October 31, 2011. Included next are amounts from the client’s trial balance, along with comparative audited information for the prior year. Audited Balance Preliminary Balance 10/31/2010 10/31/2011 Sales $ 51,316,234 $ 57,474,182 Executive salaries 546,940 615,970 Factory hourly payroll 10,038,877 11,476,319 Factory supervisors’ salaries 785,825 810,588 Office salaries 1,990,296 2,055,302 Sales commissions 2,018,149 2,367,962You have obtained the following information to help you perform preliminary analytical procedures for the payroll account balances. 1. There has been a significant increase in the demand for Morehead’s products. The increase in sales was due to both an increase in the average selling price of 4 percent and an increase in units sold that resulted from the increased demand and an increased marketing effort. 2. Even though sales volume increased there was no addition of executives, factory supervisors, or office personnel. 3. All employees including executives, but excluding commission salespeople, received a 3 percent salary increase starting November 1, 2010. Commission salespeople receive their increased compensation through the increase in sales. 4. The increased number of factory hourly employees was accomplished by recalling employees that had been laid off. They receive the same wage rate as existing employees. Morehead does not permit overtime. 5. Commission salespeople receive a 5 percent commission on all sales on which a commission is given. Approximately 75 percent of sales earn sales commission. The*AICPA adapted.RequiredApago PDF Enhancer241

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