Stella Has Two Transactions Involving the Sale of Capital Assets

question 136

Multiple Choice

Stella has two transactions involving the sale of capital assets during the year resulting in a STCL of $5,200 and LTCL of $2,400.As a result,Stella can offset

• A)$5,200 of ordinary income and have a LTCL carryforward of $2,400.
• B)$3,000 of ordinary income and have a $4,600 STCL carryforward.
• C)$3,000 of ordinary income and have a $2,200 STCL carryforward and $2,400 LTCL carryforward.
• D)$7,600 of ordinary income.

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Definitions:

Manufacturing Overhead

Indirect factory-related costs that are not directly tied to a specific product, such as maintenance and factory utilities.

Overapplied

In cost accounting, refers to a situation where the allocated amount of an indirect cost exceeds the actual incurred cost.

Underapplied

A situation where the allocated costs are less than the actual costs incurred, often in the context of manufacturing overhead.

Underapplied Overhead

A situation where the allocated manufacturing overhead for a period is less than the actual overhead incurred, leading to underestimating product costs.