Chapter 15 Case 15.3b. Using Excel to Perform Materiality Planning Student Work Area PROBLEM Required: Provide input into cells shaded in yellow in this template. Use mathematical Mobile Security, Inc. (MSI) has been an audit client of Leo & Lee, LLP for the past 12 formulas with cell references to the Problem and work areas as indicated. years. MSI is a small, publicly traded aviation company based in Cleveland, Ohio, where it manufactures high-tech unmanned aerial vehicles (UAV), also known as drones, and other surveillance and security equipment. MSI's products are primarily Calculate planning materiality for MSI based on results from the first two quarters and used by the military and scientific research institutions, but there is growing demand estimates for the last two quarters. for UAVs for commercial and recreational use. MSI must go through an extensive bidding process for large government contracts. Because of the sensitive nature of Materiali Planning government contracts and military product designs, both the facilities and records of Pre-Tax Income ty % Materiality MSI must be highly secured. First quarter pre-tax income $ 3,200,000 5% $ 160,000 The auditors have decided on planning materiality of 5% of pre-tax income. MSI's fiscal year-end is June 30. The auditors are nearing the final wrap-up stages of the Second quarter pre-tax income 2,790,000 5% 139,500 audit for the year ended June 30, 2026. The following table shows final financial information for all four quarters of fiscal year end June 30, 2026. Third quarter pre-tax income estimate 2,240,000 5% 112,000 Item 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fourth quarter pre-tax income estimate 1,570,000 5% 78,500 Total assets $ 96,000,000 $ 92,000,000 $ 93,000,000 $ 89,000,000 Total revenues 33,000,000 31,000,000 28,000,000 22,000,000 Estimate of planning materiality 490,000 Pretax income 3,200,000 2,790,000 2,240,000 1,570,000