Enter the total revenue or expenses ($), the total assets ($), and the net profit before tax ($) into the Materiality Calculator. The calculator will evaluate the Materiality. ## Materiality Formula The following formula is used to calculate the Materiality. M = .0075 * R + .015 * A + .075 * P Variables: • M is the Materiality ($)
• R is the total revenue or expenses ($) • A is the total assets ($)
• P is the net profit before tax ($) ## How to Calculate Materiality? The following steps outline how to calculate the Materiality. 1. First, determine the total revenue or expenses ($).
2. Next, determine the total assets ($). 3. Next, determine the net profit before tax ($).
4. Next, gather the formula from above =M = .0075 * R + .015 * A + .075 * P
5. Finally, calculate the Materiality.
6. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem:

Use the following variables as an example problem to test your knowledge.

total revenue or expenses ($) = 50000 total assets ($) = 10000

net profit before tax (\$) = 30000

M = .0075 * R + .015 * A + .075 * P =  ?