Isabel Owns a Vacation Home in Hawaii

question 9

Multiple Choice

Isabel owns a vacation home in Hawaii.During the year she rented it out for one week and used it for personal purposes three weeks.Her expenses directly related to renting out the property were: rental commission ($30) and maid service ($25) .The allocated portion of taxes and interest was $400.Income from the rental was $300.Isabel should:

• A)Report income of $300 and deduct $300 in expenses
• B)Report income of $300 and deduct $455 in expenses
• C)Report $300 of income and deduct no expenses
• D)Report no income and deduct $400 along with her other itemized interest and taxes

---

Definitions:

Fabrication Department

A specialized sector within a manufacturing facility focused on constructing components or products by cutting, shaping, assembling, and finishing raw materials.

Equivalent Units

A concept in cost accounting used to express the amount of work done by manufacturers in terms of fully completed units of output.

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.

Materials

Substances or components that are used in the manufacturing or production process to create goods and products.