Scenario 13-6 Tony Is a Wheat Farmer, but He Also Spends Part

question 387

Multiple Choice

Scenario 13-6
Tony is a wheat farmer, but he also spends part of his day teaching guitar lessons. Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of wheat.
-Refer to Scenario 13-6.What is the total opportunity cost of the day that Farmer Tony spent in the field planting wheat?

• A) $130
• B) $250
• C) $300
• D) $380

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Definitions:

Taxable Income

The amount of income used to calculate how much the entity owes in taxes to the federal, state, and/or local government.

Pretax Financial Income

The income of a company before taxes are deducted, often used in financial reporting and analysis.

Interperiod Tax Allocation

A method used in accounting to allocate income taxes over different periods to match taxes with the revenues they affect.

Future Enacted Tax Rates

Tax rates that have been passed into law but will go into effect at a future date, relevant for financial planning and reporting.