Bradshaw Beverages Began Operations in 2009 Assume That the Company Has Taken Full Advantage of the the Company's

question 13

Multiple Choice

Bradshaw Beverages began operations in 2009. The table below contains the company's taxable income during each year of its operations. Notice that the company lost money in each of its first three years. The corporate tax rate has been 40% each year. $$\begin{array} { c c } \text { Year } & \text { Taxable Income } \\2009& - \$ 700,000 \\2010 & - \$ 500,000 \\2011 & - \$ 200,000 \\2012 & \$ 800,000 \\2013 & \$ 1,000,000\end{array}$$ Assume that the company has taken full advantage of the Tax Code's carry-back, carry-forward provisions, and assume that the current provisions were applicable in 2009. How much did the company pay in taxes during 2013?

• A) $160,000
• B) $168,000
• C) $176,400
• D) $185,220
• E) $194,481

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Definitions:

Socially Efficient Quantity

The level of production or consumption of a good or service that results in the optimal allocation of resources, considering both private and social costs and benefits.

Profit-Maximizing Quantity

The level of production at which a company achieves its highest profit, where marginal cost equals marginal revenue.

Average Total Cost

The total cost divided by the quantity of output produced; it is the sum of average fixed costs and average variable costs.

Marginal Cost

The extra cost incurred when one more unit of a product or service is produced.