Cantle Co has profit before tax of $3.6 million. Using a benchmark of 5% to 10% of profit before tax, what range would the auditor consider for overall materiality?

Correct answer: C) $180,000 to $360,000

Explanation

5% x $3.6m = $180,000 and 10% x $3.6m = $360,000. The range $18,000 to $36,000 applies 0.5% to 1%, $36,000 to $72,000 applies 1% to 2%, and $360,000 to $720,000 applies 10% to 20%. The auditor uses professional judgement to select a figure within the range based on risk.