THESE FACTS ARE USED FOR THE NEXT QUESTION

question 23

Multiple Choice

THESE FACTS ARE USED FOR THE NEXT QUESTION.
Mr. Harley Davidson earned $107,300 adjusted gross income) in 1992. After application of the relevant legal provisions, his taxable income was $86,362. The relevant portion of the tax table reads:
If taxable income is:

-Approximately what average effective tax rate did Mr. Davidson pay?

• A) 21%
• B) 26%
• C) 31%
• D) None of the above.

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Definitions:

Unused Capacity

The portion of a company's production potential that is not being utilized to manufacture goods or provide services.

Estimated Activity

An approximation of the amount of work or level of effort needed for a particular task or project.

Activity at Capacity

The level of operational activity that a company can achieve using its current resources without incurring additional costs.

Machine-Hours

A measure of the amount of time machines are used in the production process, often related to the allocation of manufacturing overhead.