A Taxpayer May Choose to Accept a Reduced Market Rate

question 78

Multiple Choice

A taxpayer may choose to accept a reduced market rate of return on an investment to take advantage of a tax preference associated with the investment. In such case, the taxpayer will pay a/an:

• A) Excise tax
• B) Explicit tax
• C) Implicit tax
• D) Transaction tax

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Definitions:

Variable Overhead

Overhead costs that vary directly with the level of production or activity, such as electricity or material handling costs.

Direct Material

Raw materials that can be directly traced to the production of a specific product and are a significant component of its cost.

Variable Overhead

Costs of overhead that vary directly with the level of production, such as utilities or indirect materials.

Power Cost

The expense associated with the consumption of electrical energy by a company's operations.