During the Current Year, the Santo Trust Received $30,000 of Taxable

question 13

Multiple Choice

During the current year, the Santo Trust received $30,000 of taxable interest income, paid trustee's commissions of $3,000, and had no other income or expenses. The Santo trust instrument requires that $20,000 be paid annually to Marilyn and $40,000 be paid annually to Domingo. How much gross income must Marilyn and Domingo recognize?

• A) $20,000 by Marilyn and $40,000 by Domingo.
• B) $15,000 by Marilyn and $15,000 by Domingo.
• C) $13,500 by Marilyn and $13,500 by Domingo.
• D) $9,000 by Marilyn and $18,000 by Domingo.

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Definitions:

Overhead Costs

Indirect costs not directly traceable to a specific product or service, including utilities, rent, and managerial salaries.

Activity Rate

An activity rate is the cost driver rate used in activity-based costing to allocate overhead costs to products or services.

Activity-based Costing

An accounting method that assigns costs to products or services based on the activities and resources that go into their production, providing more accurate cost information.

Resource Consumption

The use of resources (such as raw materials, energy, or labor) by a process, project, or activity, typically measured to manage efficiency and costs.