The Choice of a Flow-Through Entity for a Closely-Held Corporation

question 58

Short Answer

The choice of a flow-through entity for a closely-held corporation often is between a(n)____________________ (a Federal tax entity)and a(n)____________________ (a state tax entity).
S corporation,limited liability company

---

Definitions:

Facility-Level Costs

Costs related to activities and services that support the entire organization, like factory rent or salaries of maintenance staff.

Facility-Level Costs

Fixed costs that do not vary with the level of production or output, associated with maintaining a production facility.

Activity-Based Costing

An accounting method that allocates costs to products or services based on the activities and resources consumed in the production or delivery process.

Overhead Assignment

The process of allocating indirect costs (or overheads) to various cost objects such as products, projects, or departments.