Using difference estimation, an auditor has taken a sample of 200 from a population's 40,000 items; that population has a book value of $200,000. She found that in her sample the average audited value was $4.20, while the average book value was $5.20. What is the estimated total audited value of the population?
A) $160,000.
B) $161,538.
C) $168,000.
D) $200,000.

Question

Quizplus · Accepted Answer

The difference between the average book value and the average audited value is $1.00 ($5.20 - $4.20). The total difference for the population is estimated as 40,000 items * $1.00 = $40,000. Subtracting this from the total book value gives $200,000 - $40,000 = $160,000 as the estimated total audited value.

Using Difference Estimation, an Auditor Has Taken a Sample of 200