Ingrid Owns a Lamp Store

question 67

Multiple Choice

Ingrid owns a lamp store.Her total costs are $225,000 per year,and her fixed costs are $150,000 per year.This means that her variable costs are

• A) $150,000.
• B) $225,000.
• C) $375,000.
• D) $50,000.
• E) $75,000.

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Definitions:

Depreciation Tax Shield

The reduction in income tax expense that results from the depreciation expense on capital assets, allowing companies to save money on taxes.

Marginal Tax Rates

The rate of tax applied to the last dollar of income, which can vary depending on the income level and filing status of an individual or entity.

Straight-Line

A method of calculating depreciation of an asset, where its cost is evenly spread over its useful life.