A good answer is: $105,250.

It would be inappropriate to state that there was one correct answer for a materiality calculation.

$105,250 is the average of:

½% of revenue current year

1% of revenue current year

1% of total assets current year

2% of total assets current year

It is appropriate to use the budgeted figures for the year, rather than the prior year figures, particularly since the financial picture, particularly in regard to revenue is different this year. As the budget was updated halfway through the year they are more indicative of actual results than pure budgeted figures would be. It would be incorrect to average in the prior year revenue figure if revenue has dropped consistently through the year, as inclusion of last year's higher figure would wrongly inflate planning materiality and be against the trend in the financial information.

However, you should remember that planning materiality is indicative only and should be reappraised throughout the audit as more information about the actual figures becomes available.