A Business Generates Profits of $150,000

question 94

Multiple Choice

A business generates profits of $150,000.The owner currently has a 28% MTR.What is the total amount of taxes paid if the business is a regular corporation and $20,000 in dividends is distributed to its sold individual shareholder?

• A)Corporate tax,$41,250; individual tax,$3,000
• B)Corporate tax,$33,950; individual tax,$5,600
• C)Corporate tax,$41,750; individual tax,$5,600
• D)Corporate tax,$0; Individual tax,$42,000

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a short period, such as rent or salaries.

Break Even

A financial situation where total costs equal total revenues, resulting in no net profit or loss.

Break-Even

The point at which total costs and total revenues are equal, resulting in no net loss or gain for the business.

Monthly Unit Sales

The total number of units of a product sold by a company in one month.