On August 13 of the Following Year, Joy Files Her

question 54

Essay

On August 13 of the following year, Joy files her current calendar-year tax return and pays the amount due without having requested an extension. The tax shown on her return is $25,000. Her current-year withholding tax is $15,000. Joy pays no estimated taxes and does not claim any tax credits on her current-year return. Calculate the penalties that the IRS is likely to assess. Ignore the penalty for underpayment of estimated taxes. Assume she did not commit fraud.

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Definitions:

Direct Materials Cost Variance

The difference between the actual cost of direct materials used in production and the standard cost expected to be used.

Direct Labor Cost Variance

The difference between the budgeted cost of direct labor and the actual cost incurred.

Cost Variance

The difference between the expected (budgeted) cost and the actual cost incurred.

Actual Costs

The real, observed expenditures incurred as opposed to estimated or standard costs.