Which of the Following Concerning Implicit Taxes and Clienteles Is

question 31

Multiple Choice

Which of the following concerning implicit taxes and clienteles is not true?

• A)Market forces drive down the BTROR of tax-favored assets.
• B)The reduced return of tax-favored assets is an implicit tax.
• C)Investors whose tax rate exceeds that of the marginal investor can reap some benefit through the clientele effect.
• D)Marginal investors will always benefit from the implicit tax on tax-favored investments.

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Definitions:

Standard Direct Labor

The predetermined cost of labor that is directly involved in the production of goods.

Standard Rate

A predetermined cost or price that is used for calculating variances, budgeting, or setting product prices.

Variable Overhead

The portion of overhead costs that varies directly with production volume.

Variable Overhead Rate Variance

The variance between the expected variable overhead according to standard cost and the actual variable overhead costs incurred.