The Manager of Brick Company Is Given a Bonus Based

question 155

Multiple Choice

The manager of Brick Company is given a bonus based on income before income taxes.Net income, after taxes, is $11,200 for FIFO and $9,800 for LIFO.The tax rate is 30%.The bonus rate is 20%.How much higher is the manager's bonus if FIFO is adopted instead of LIFO?

• A)$84
• B)$2,800
• C)$400
• D)$420

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Definitions:

Units Sold

The total quantity of products sold within a specific timeframe.

Product Cost

The total expenses incurred to produce a product or service, including direct materials, labor, and manufacturing overhead costs.

Per Unit

Per unit refers to expressing measures, costs, or prices for individual items or quantities of items.

Absorption Costing

This accounting system ensures the inclusion of all manufacturing-related expenses, such as direct materials, direct labor, and both variable and fixed overheads, into the cost of producing a product.