An auditor who reviewed the efficiency of a small drug-manufacturing division of a multibillion-dollar conglomerate gathered the following pieces of evidence:

1. The total budget for the drug division employed approximately 1 percent of the company's total assets.

2. Three months before the audit, the Federal Drug Administration (FDA) approved the sale of a new drug produced by the division for treatment of arthritis. Although the company's researchers and the FDA had performed extensive tests, the auditor discovered a note in one company scientist's research papers indicating that a significant risk of hair loss was present for a particular group of patients who might use the drug. The FDA, however, had placed no restrictions on the sale of the drug, and the auditor discovered that although the scientist had voiced his concerns, management had decided to market the product without any warnings to patients or doctors. Management had decided on this strategy after two other researchers on the project said they believed the risk of serious side effects, including hair loss, was remote. Total expected sales of the drug were estimated by the marketing department to be \(\$ 500,000\) per year. The auditor, in consultation with the legal department, concluded that one class-action suit could cost the company at least 10 times that amount.

3. The drug division expensed two trucks, costing \(\$ 25,000\) each, that should have been capitalized.

4. Payments to suppliers often were delayed, causing \(\$ 25,000\) in lost discounts. That was 0.25 percent of net profits from the division's previous year's operations.

Required:

Assess the materiality of each of the above items.