During Its First Year of Operations a Company Recorded Accrued

question 63

Multiple Choice

During its first year of operations a company recorded accrued warranty expense totaling $75,000 for book purposes.For tax purposes,$25,000 of the expenses are deductible during the first year of operations and $50,000 are deductible during the second year of operations.Book income from operations during the first year was $750,000.The enacted income tax rate was 40% during the first year of operations and 45% during the second year of operations.The income tax expense to be reported in the income statement for the first year of operations is

• A)$297,500.
• B)$300,000.
• C)$277,500.
• D)$280,000.

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Definitions:

AVC Curve

A graphical depiction of the average variable costs incurred by a firm in the short run, illustrating how costs vary with output levels.

AFC Curve

A graph representing Average Fixed Costs, which shows how fixed costs per unit of output decrease as production increases.

Total Cost Function

An equation that expresses the total cost of producing a given quantity of output, considering both fixed and variable costs.