In the Calculation of Gross Income, Which of the Following

question 30

Multiple Choice

In the calculation of gross income, which of the following is not an example of nontaxable employee benefits?

• A)Purchase discounts for all employees equal to the employer's gross profit percentage
• B)Group-term life insurance for $100,000 of coverage
• C)Parking provided in the company garage
• D)Supper money for voluntarily working overtime

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Definitions:

Direct Labor-hours

The total amount of time spent by workers directly involved in the manufacturing of a product.

Variable Overhead Standards

The budgeted or standard costs associated with variable overheads, which are expected to change in proportion to different levels of production activity.

Direct Labor-hours

Represents the total hours of labor directly involved in manufacturing a product or delivering a service.

Variable Overhead Rate

The rate at which variable overhead costs are allocated to each unit of production, typically based on hours of labor or machine hours.