The Manager of Yates Company Is Given a Bonus Based

question 181

Multiple Choice

The manager of Yates Company is given a bonus based on income before income taxes. Net income, after taxes, is $5,600 for FIFO and $5,040 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?

• A) $200
• B) $300
• C) $160
• D) $560

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Definitions:

Accounts Receivable-Stanton

Likely refers to the amounts due to a business (possibly named Stanton) from its customers for goods or services delivered on credit.

Delivery Expense

Costs incurred by a company to transport its goods to customers, including shipping fees, packaging, and logistics services.

FOB Shipping Point

is a shipping term indicating that the buyer assumes responsibility for the goods and the shipping costs at the point of departure from the seller's location.

Merchandise Purchases

Transactions involving the buying of goods for resale purposes, typically part of the inventory acquisition process in retail or wholesale businesses.