A Company Uses Graduated First-Dollar-Of-Profits Formula for Their Profit-Sharing Plans

question 26

Multiple Choice

A company uses graduated first-dollar-of-profits formula for their profit-sharing plans.They choose to share 4% of the first $10 million of after-tax profits and 7% of the after-tax profits in excess of that level.Last year if this company's after-tax profit were $15 million,how much of this profit would be distributed to the employees?

• A) $1,200,000
• B) $1,000,000
• C) $750,000
• D) $600,000

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Definitions:

Depreciation

The reduction in the value of an asset over time, often due to wear and tear or the passage of time.

Inventory Investment

The stock of goods or raw materials kept by a business to meet future sales or production needs.

Hybrid Varieties

Plant varieties developed through the crossbreeding of two genetically different parent plants, aiming to produce offspring with desirable traits from both.

Partnerships

A form of business organization in which two or more individuals share ownership, responsibilities, and the profits or losses of the enterprise.