Kathy Is 48 Years of Age and Self-Employed

question 85

Multiple Choice

Kathy is 48 years of age and self-employed. During the year she reported $500,000 of revenues and $100,000 of expenses relating to her self-employment activities. If Kathy has no other retirement accounts in her name, what is the maximum amount she can contribute to an individual 401(k) ?

• A) $77,351.
• B) $83,351.
• C) $60,000.
• D) $54,000.

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Definitions:

Indirect Labor Cost

Wages and related expenses for workers who assist in or facilitate the production process but do not directly work on the product.

Direct Materials Cost

The expenditure on raw materials that are directly traceable to the production of a specific product.

Direct Labor Cost

Expenses associated with employees who directly contribute to the production of goods, such as wages for assembly-line workers.

Cost of Goods Manufactured

The sum of all expenses associated with the creation of finished goods within a given time frame, encompassing wages, raw materials, and indirect costs.