Auditors are often required to compare the audited (or current) value of an inventory
Chapter 11, Problem 11.4(choose chapter or problem)
Auditors are often required to compare the audited (or current) value of an inventory item with the book (or listed) value. If a company is keeping its inventory and books up to date, there should be a strong linear relationship between the audited and book values. A company sampled ten inventory items and obtained the audited and book values given in the accompanying table. Fit the model Y = 0 + 1x + to these data. Item Audit Value (yi) Book Value (xi) 1 9 10 2 14 12 37 9 4 29 27 5 45 47 6 109 112 7 40 36 8 238 241 9 60 59 10 170 167 a What is your estimate for the expected change in audited value for a one-unit change in book value? b If the book value is x = 100, what would you use to estimate the audited value?
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