In Order to Curtail Bracket Creep,the Tax Reform Act of 1986

question 38

Multiple Choice

In order to curtail bracket creep,the tax Reform Act of 1986

• A) lowered the tax rates.
• B) reduced the number of brackets and widened the income levels in each bracket.
• C) raised the lowest income levels that are subject to tax.
• D) narrowed the income levels in each bracket and shorten each bracket.
• E) removed the 5% surcharge on certain upper income levels.

---

Definitions:

Direct Material Cost

The expense of fundamental materials directly utilized in the production of a product.

Product Cost

The total amount of costs directly and indirectly involved in manufacturing a product or delivering a service.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Super-Variable Costing

A costing method that classifies all direct labor and manufacturing overhead costs as fixed period costs and only direct materials as a variable product cost.