Dishware Distribution Limited Uses Average Costing to Cost Its Inventory

Multiple Choice

Dishware Distribution Limited uses average costing to cost its inventory.It keeps a perpetual inventory file that is linked to its sales systems.It orders inventory in for specific customers as needed,and traditionally has a slow time just before its year-end.Accordingly,inventory at the year-end is about $2000,while materiality is about $30 000.How should the auditor approach the audit of physical inventory?

A) Exclude testing of physical inventory from the audit program.
B) Use attribute sampling to select a sample of items to count.
C) Use dollar-unit sampling to select a sample of items to count.
D) Count only those items that have a dollar value in excess of $100.