In the First Two Years of Operations, a Company Reports

question 7

Multiple Choice

In the first two years of operations, a company reports taxable income of $200,000 and $250,000, respectively. During these first two years, the tax rates were 30% and 35% respectively. It is now the end of the third year, and the company has a loss of $260,000 for tax purposes. The company carries losses to the earliest year possible. The tax rate is currently 40%. The amount of income tax receivable in the current (third) year is:

• A)$104,000
• B)$81,000
• C)$147,500
• D)$91,000

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Definitions:

Shortest Processing Time

A scheduling strategy that prioritizes tasks or operations based on the shortest amount of time required to complete them.

Defect Rate

The number of goods produced that are outside the company’s boundaries of acceptable quality.

Tolerance Range

The boundaries a manager sets in determining the acceptable quality of a product.

Dispatching

The process of sending off goods or services to their intended destinations or assigning tasks to individuals.