In 2018, Carol, Who Is 54 and Single, Earned a Salary

question 40

Multiple Choice

In 2018, Carol, who is 54 and single, earned a salary of $54,000 and $6,000 of interest on State of Nevada bonds. She contributed $2,000 to her Roth IRA, paid a $12,000 hospital bill, state income taxes of $1,500, real estate taxes of $900, mortgage interest of $4,500, and $2,000 interest on her margin account under which she purchased the bonds. What is Carol's taxable income?

• A) $37,050
• B) $39,150
• C) $41,050
• D) $43,050

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Definitions:

Fixed Costs

Expenses that remain constant regardless of production or sales volume in the short term, like lease payments or wages.

Relevant Range

The range of activity within which the assumptions about cost behavior hold true for a specific operation or business.

Merchandising Company

A company that purchases goods in a finished state for the purpose of reselling them without further manufacturing.

Cost Structure

Cost structure denotes the various types of expenses a business incurs and is typically categorized into fixed and variable costs, influencing pricing and profitability.