Determine and justify the dollar amount of materiality.

Concept and a Company 8.1 "Crazy Eddie - His prices are insane!" Concep Analytical procedures to test inventory. StoryIn 1969, Eddie Antar, a 21-year-old high school dropout from Brooklyn, opened a consumer electronics store with 15 square meters of floor space in New York City. By 1987, Antar's firm. Crazy Eddie, Inc., had 43 retail outlets, sales exceeding $350 million, and outstanding common shares with a collective market value of $600 million Shortly after a hostile takeover of the company in November 1987, the firm's new owners discovered that Crazy Eddie's inventory was overstated by more than $65 million. Subsequent investigations by regulatory authorities would demonstrate that Crazy Eddie's profits had been intentionally overstated by Eddie Antar and several subordinates (Belsky and Furman 1989). Crazy Like a Fox Antar acquired the nickname "Crazy Eddie" because of his unique sales tactic. Whenever a customer would attempt to leave his store without purchasing something, Eddie would block the store's exit, sometimes locking the door until the individual agreed to buy something - anything. To entice a reluctant customer to make a purchase, Antar would lower the price until the customer finally gave in. From 1972, Doctor Jerry was the spokesperson for Crazy Eddie. He made a series of ear-piercing television commercials that featured him screaming "Crazy Eddie - His prices are insane! The company promised to refund the difference between the selling price of a product and any lower price for that same item that a customer found within 30 days of the purchase date. (Knapp 2001) Inventory Overstated Trouble was that in late 1986 the boom days had ended for the consumer electronics industry To continue the growth of the company and keep the stock price up, Antar had to do something. Within the first six months after the company went public, Antar ordered a subordinate to overstate inventory by $2 million, resulting in the firm's gross profit being overstated by the same amount. The following year Antar ordered year-end inventory to be overstated by $9 million and