Using the Same Assumption as Above About a Negative Income

question 35

Multiple Choice

Using the same assumption as above about a negative income tax system, if a person who was earning no income takes a job paying an annual salary of R150 000, how much better off will that person be after taking income tax into account?

• A) No better off.
• B) R37 500 better off.
• C) R112 500 better off.
• D) R150 000 better off.

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Definitions:

Standard Cost

A predetermined cost of manufacturing, delivering, or producing goods or services under normal conditions.

Variance Accounts

Financial accounts used to record the differences between planned and actual figures in budgeting and accounting.

Favorable Variances

Differences between planned and actual performance that result in a better-than-expected financial outcome.

Materials Price

The cost associated with acquiring raw materials required for production or manufacturing processes.