Use the Information for the Question(s) Below

question 10

Multiple Choice

Use the information for the question(s) below.
Ford Motor Company is considering launching a new line of Plug-in Electric SUVs. The heavy advertising expenses associated with the new SUV launch would generate operating losses of $35 million next year. Without the new SUV, Ford expects to earn pre-tax income of $80 million from operations next year. Ford pays a 30% tax rate on its pre-tax income.
-The amount that Ford Motor Company owe in taxes next year without the launch of the new SUV is closest to:

• A) $24.0 million
• B) $56.0 million
• C) $31.5 million
• D) $13.5 million

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Definitions:

Income Data

Financial information that shows the revenues earned and expenses incurred by a business over a period of time.

Asset Data

Information about the resources owned by a business, which have economic value and can contribute to generating income.

Office Expenses

Costs associated with running an office, such as rent, utilities, and administrative salaries.

Allocation Bases

Allocation bases are criteria or metrics used to distribute costs among different departments, products, or processes in accounting.