Illusions Inc

question 22

Multiple Choice

Illusions Inc. just completed its second year of operations and has a deferred tax asset of $43,700 related to a net operating loss of $115,000 from the previous year. In the current year Illusions generates $390,000 in revenues and incurs $260,000 in expenses. There are no permanent or temporary book-tax differences. Assuming the same tax rate as last year, what amount will Illusions record for Income Tax Payable in the current year?

• A) $5,700
• B) $49,400
• C) $148,200
• D) Cannot be determined from the information provided.

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Definitions:

Total Manufacturing Cost Variance

The difference between actual manufacturing costs and the standard costs of those manufactured items.

Direct Labor Cost Variance

The difference between the budgeted or standard cost of direct labor and the actual cost incurred, used in variance analysis for cost control.

Factory Overhead Cost Variance

The difference between the actual overhead costs incurred and the expected (or standard) costs, relating to production.

Variances From Standard

The differences between actual costs and the standard (expected) costs set by a company for its products or processes.