Which of the Following Statements Is Incorrect with Respect to Determining

question 6

Multiple Choice

Which of the following statements is incorrect with respect to determining current E & P?

• A) All tax-exempt income should be added back to taxable income.
• B) Dividends received deductions should be added back to taxable income.
• C) Current-year charitable contributions in excess of the 10% of taxable income limit should be subtracted from taxable income.
• D) Federal income tax refunds should be added back to taxable income.
• E) None of these statements are incorrect.

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Definitions:

Direct Labor-Hours

The cumulative hours employees directly participating in the production process have worked.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected (or standard) cost of materials.

Variable Manufacturing Overhead

Costs that vary in total in direct proportion to changes in the volume of production, such as indirect materials and utility costs directly tied to production.

Raw Materials

The basic materials from which a product is made, prior to any processing or manufacturing.