In the Negative Income Tax Plan, a Guarantee of $5,000

question 147

Multiple Choice

In the negative income tax plan, a guarantee of $5,000 and a tax rate of 50 percent imply a break-even income of which of the following figures?

• A)$1,000
• B)$2,500
• C)$10,000
• D)$12,500

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Definitions:

Job-Order Costing System

An accounting system that accumulates costs per job rather than per time period, used in industries where goods are custom-made.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a certain activity.

Variable Manufacturing Overhead

Costs that fluctuate with production volume, such as utilities and materials used in the production process.

Direct Labor-Hours

The total number of hours worked by employees who are directly involved in the manufacturing process.