Phyllis Is an Electrician Employed by Bogie Company

question 121

Multiple Choice

Phyllis is an electrician employed by Bogie Company. Phil is a self-employed electrician. During the current year, Phyllis's salary is $75,000 and Phil's net self-employment income is $75,000. Which of the following statements about the Social Security and self-employment taxes paid is/are correct?
I.Phil's self-employment tax is greater than the Social Security tax paid on Phyllis's income.
II.Phil pays more self-employment tax than Phyllis pays in Social Security tax.
III.Phil and Phyllis pay the same amount of tax.
IV.Phil's self-employment tax is equal to the Social Security tax paid on Phyllis's income.
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• A)Only statement I is correct
• B)Only statement I is correct.
• C)Only statement IV is correct.
• D)Statements I and III are correct.
• E)Statements II and IV are correct.

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Definitions:

Machine Breakdowns

Situations when industrial or office machinery stops functioning due to mechanical failure, necessitating repair or replacement.

Utility Costs

Expenses incurred for essential services such as electricity, gas, water, and sewer, which are necessary for operating a business or maintaining a home.

Variable Factory Overhead Controllable Variance

The difference between actual variable overhead incurred and the expected (or budgeted) variable overhead based on standards set by management.

Standard Labor Hours

The estimated amount of time expected to produce a unit of output under normal conditions.