Bryan Houlberg Expects His C Corporation to Generate a Profit

question 12

Multiple Choice

Bryan Houlberg expects his C corporation to generate a profit of $200,000.What is the effective tax rate on the $200,000 if net income after corporate tax is distributed to him as a dividend and his marginal tax rate on ordinary income is 39.6%?

• A)35%
• B)59.6%
• C)44.5%
• D)39.6%

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Definitions:

Machine Hours

A measure of production or work done, calculated by the number of hours a machine is operated.

Sales Mix

The variation in the quantities and types of products or services that a company sells, influencing the total revenue and profits.

Production Information

Data related to the manufacturing process, including quantities produced, costs, and production times.

Direct Labor Hours

The hours worked by employees that can directly be attributed to specific units of production.