ACCA AA · Chapter 6 · Question 7 of 11
Overall materiality for the audit of Mullion Co has been set at $420,000. The audit manager sets performance materiality at 70% of overall materiality. What is performance materiality?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $294,000
Explanation
Performance materiality = 70% x $420,000 = $294,000. $126,000 is 30% of materiality, $420,000 ignores performance materiality entirely, and $600,000 incorrectly divides $420,000 by 0.70.
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