Income Taxes Are Levied on

question 130

Multiple Choice

Income taxes are levied on

• A)net cash flow.
• B)income as measured by accounting rules.
• C)net cash flow plus depreciation.
• D)income as measured by tax rules.

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Definitions:

Direct Labor-Hours

A measure of the actual labor time spent on producing goods, often used to allocate manufacturing overhead to products.

Plantwide Predetermined Rate

A single overhead absorption rate calculated for an entire manufacturing plant, used to allocate manufacturing overhead to individual products.

Machine-Hours

A measure of production time, indicated by the number of hours machines are operating in the manufacturing process.

Manufacturing Cost

The total cost incurred by a company to produce goods, including raw materials, labor, and overhead.