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Inventory has 1,000 SKU items and a book value of $2,908,144. You test a sample...

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Accounting

Inventory has 1,000 SKU items and a book value of $2,908,144. You test a sample of 200 SKU items having a book value of $581,629. The audited value of your sample is $524,629 indicating $57,000 error in the sample. If tolerable error is $290,000, would you conclude that inventory is

- materially overstated

- not materially overstated

- need additional evidence

- materially understated

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