1. Development of Auditors Expectation Four regular games Allocation Total fans 0.7 16,800 0.2 4,800 0.

1 2,400 24,000 Less free 16,300 4,800 2,400 23,500 Price per ticket 12 8 5 Total Revenue 195,600 38,400 12,000 246,000 x4 984,000

Four regular games

Bloomington University (30% higher attendace, 20% higher ticket price) Allocation Total fans Less free Price per ticket Total Revenue 0.7 21,840 21,340 14.4 307,296 0.2 6,240 6,240 9.6 59,904 0.1 3,120 3,120 6 18,720 31,200 30,700 385,920 Norwalk University (20% more fans with 75% box seats, 25% upper deck) Extra fans Price per ticket Total Revenue Box 3,600 12 43,200 Upper 1,200 5 6,000 Total extra fans 4,800 Regular game revenue 246,000 295,200 Westport University (10% higher ticket prices. 5% lower attendace) Base Less free seats Allocation attendance and 5% Price per ticket Total Revenue 0.7 16,800 15,485 13.2 204,402 0.2 4,800 4,560 8.8 40,128 0.1 2,400 2,280 5.5 12,540 257,070 Total estimated revenue for 7 games: 1,922,190

2. Reported ticket revenue differs from the expectation by approximately 14.5 percent ((2,200,000 1,922,190)/1,922,190). This difference is material and should be investigated. One explanation for the larger than expected reported ticket revenue could be that the football team performed better than expected. In addition, perhaps the weather also was better than expected. Auditors can verify ticket sales, perhaps by comparing deposits of ticket revenue with reported attendance. The auditors also could check weather conditions on game days to ascertain whether favourable weather conditions are a plausible explanation for the higher attendance. 3. In this problem, analytical procedures will be most effective when accurate expectations can be developed. From this information provided in this problem, it appears that the auditors knowledge of Citys ticket sales is sufficient to allow them to develop a reasonable expectation.