Scenario 20-7 Suppose the Government Implemented a Negative Income Tax and Used

question 361

Multiple Choice

Scenario 20-7
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/6 of income) - $24,000
-Refer to Scenario 20-7. A family earning $120,000 before taxes would have how much after-tax income?

• A)-$4,000
• B)$96,000
• C)$116,000
• D)$124,000

---

Definitions:

Profit Centers

Divisions or departments within an organization that are responsible for generating its income.

Management Performance Report

A document that evaluates and summarizes the effectiveness and efficiency of a company's management in achieving corporate objectives.

Controllable Fixed Costs

Fixed costs that management has the authority to increase or decrease, such as advertising expenses or research and development costs.

Contribution Margin

The amount by which a product’s selling price exceeds its variable costs, indicating how much contributes to covering fixed costs and generating profit.