What Is the Deferred Tax Liability Under the Deferral Method

question 3

Multiple Choice

What is the deferred tax liability under the deferral method for FY2018?

• A) $52,500
• B) $36,750
• C) $27,500
• D) $15,750

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Definitions:

Fixed Manufacturing Overhead Cost

Overhead costs related to manufacturing that remain constant regardless of the level of production, such as factory rent and salaries of supervisors.

Variable Manufacturing Overhead

Costs in manufacturing that change with the level of production output, like utilities or raw materials.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production of goods or services.

Predetermined Overhead Rate

A predetermined overhead rate is an estimated charge per unit of activity that is used to allocate indirect costs to products or services.