• Jamie, from MSM CPA Firm, is auditing RC Airplanes for Year 3. Jamie expects the users of the financial statements to have a medium to high level of tolerance for misstatements and to be most interested in earnings. MSM CPA Firm has the following audit guidance for calculating materiality:

Benchmark Low Low to Med. Medium Med. to High High

Profit before Tax 9% 8% 7% 6% 5%

Total Assets 2% 1.75% 1.50% 1% .50%

• Benchmark selected should be the one that is most relevant to users of the financial statements.

Jamie has obtained the following information from RC Airlines Year 3 financial statements.

Revenues: $1,750,000

Total Assets: $850,000

Profit before Tax: $250,000

Based on the facts above, what is the overall materiality level that Jamie should use for RC Airlines?

Group of answer choices

$12,750

$15,000

$17,500

$32,500

Type or paste question here