Ivan's AGI Is About $50,000 This Year,and His Typical Medical

question 18

True/False

Ivan's AGI is about $50,000 this year,and his typical medical expenses average about $4,000 per year.He will be in the 25% tax bracket.Ivan plans to partially retire next year at age 60 so he expects about a $15,000 reduction in AGI and his marginal tax rate to drop.Ivan will have about $1,000 of non-emergency dental work done in the next few months.Ivan should get the dental work done this year so he can enjoy tax savings at the higher tax rate.

---

Definitions:

Budgeted Activity

The level of operation or volume of work planned for a period, used in budgeting and planning processes.

Fixed Overhead

Costs that do not vary with the level of production or sales, such as salaries and rent.

Direct Labor-Hours

A measure of the work done by labor force, specifically calculated based on the hours worked in producing goods.

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life.