This Year Clark Leased a Car to Drive Between His

question 57

Multiple Choice

This year Clark leased a car to drive between his office and various work sites. Clark carefully recorded that he drove the car 23,000 miles this year and paid $7,200 of operating expenses ($2,700 for gas, oil, and repairs, and $4,500 for lease payments) . What amount of these expenses may Clark deduct as business expenses?

• A) Clark is not entitled to any deduction if he used the car for any personal trips.
• B) $7,200
• C) $2,700
• D) $4,500
• E) Clark cannot deduct these costs because taxpayers must use the mileage method to determine any transportation deduction.

Understand the calculation of total variable costs and cost per unit.

Identify and calculate fixed manufacturing costs.

Calculate the contribution margin per unit.

Understand the classification and calculation of conversion and product costs.

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Definitions:

Limited Liability Company

A business structure that combines the pass-through taxation of a partnership with the limited liability protections of a corporation.

Managing Business

The process of organizing, planning, leading, and controlling the operations of a business to achieve its objectives.

Limited Liability Company

A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability protections of a corporation.

Organizational Form

Refers to the structure and design of an organization, determining the hierarchy, communication flow, and allocation of responsibilities.