Just need the justification for the base (Gross margin) & Percentage (5%)

1. Planning data 3. Justify/Support your Preliminary Judgment about Materiality State the factors you considered when you chose the base and the percentage for the preliminary judgment about materiality. Link the percentage you chose to the level of acceptable audit risk. Sales/revenue (net) Base: Expenses Gross margin Pre-tax income Current assets Current liabilities Total assets Materiality 2. Preliminary Judgment about Materiality Percentage: * Materiality percentages: These materiality factors are provided as Pre-tax income 310% guidelines only, and should be used only as AssetsEquity1/21%1/25%anaidinthedevelopmentofyourprofessionaljudgment.Thematerialitylevelshouldrepresent Gross profit 1/25% of misstatements that would not, in your judgment, influence or change a decision based on the financial statements. 1. Planning data 3. Justify/Support your Preliminary Judgment about Materiality State the factors you considered when you chose the base and the percentage for the preliminary judgment about materiality. Link the percentage you chose to the level of acceptable audit risk. Sales/revenue (net) Base: Expenses Gross margin Pre-tax income Current assets Current liabilities Total assets Materiality 2. Preliminary Judgment about Materiality Percentage: * Materiality percentages: These materiality factors are provided as Pre-tax income 310% guidelines only, and should be used only as AssetsEquity1/21%1/25%anaidinthedevelopmentofyourprofessionaljudgment.Thematerialitylevelshouldrepresent Gross profit 1/25% of misstatements that would not, in your judgment, influence or change a decision based on the financial statements