Corner Grocery, Inc

question 352

Multiple Choice

Corner Grocery, Inc., a C corporation with high taxable income, donates some of its inventory to the County Food Bank (a charitable organization) which distributes food to the needy. At the time of the contribution, the FMV of the inventory was $20,000, and Corner Grocery's basis was $12,000. Corner Grocery will be allowed a charitable contribution deduction of

• A) $20,000.
• B) $16,000.
• C) $8,000.
• D) $12,000.

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Definitions:

Direct Labor

The labor cost of workers directly involved in the production of goods or services, considered a variable cost.

Applied Factory Overhead

The portion of factory overhead costs that has been assigned to goods produced, often based on a predetermined rate.

Equivalent Units

A concept in cost accounting used to convert partially completed units into an equivalent number of fully completed units during a specific period for costing purposes.

Conversion Costs

The sum of labor and overhead costs that are necessary to convert raw materials into finished goods.