Which of the Following Expenditures Would Not Be Deductible as a Business

question 41

Multiple Choice

Which of the following expenditures would not be deductible as a business expense?

• A) Costs of holding a business meeting at a local country club
• B) The fare for flying business class to an overseas meeting
• C) Paying the interest on a loan for the owner's grandfather
• D) Paying the owner's 17 year old son a salary of $9 per hour for cleaning and janitor services

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Definitions:

Variable Cost Per Unit

The cost that changes in proportion with the production volume or activity level.

Units Produced

The total number of finished units that have been manufactured during a specific time period.

Fixed Cost Per Unit

The cost that remains constant in total but varies inversely with the level of production or sales volume.

Relevant Range

The range of activity or volume over which the assumptions about variable and fixed cost behaviors hold true, beyond which cost patterns may change.