Suppose That You Could Either Prepare Your Own Tax Return

question 433

Multiple Choice

Suppose that you could either prepare your own tax return in 8 hours or hire a tax specialist to prepare it for you in 2 hours. You value your time at$20.00an hour; the tax specialist will charge you $45 an hour. The opportunity cost of preparing your own tax return is

• A)$250.
• B)$45.
• C)$90.
• D)$160.

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Definitions:

Broker Commission

A fee paid to a broker for executing a transaction, typically a percentage of the transaction value.

Fixed Cost Method

An accounting strategy where fixed costs are expensed in the period they occur, without regard to changes in the volume of production or sales.

Cost-Plus Approach

A pricing strategy where the selling price is determined by adding a specific markup to the cost of producing or purchasing the product.

Differential Profit

The change in profit resulting from choosing one option over another in decision-making processes.