Milroy Company Manufactures Steering Wheels

question 144

Multiple Choice

Milroy Company manufactures steering wheels.Its taxable income in 2017 before the Qualifying Production Activities Deduction (QPAD) is $2,000,000 and its qualified production activities income is $2,500,000.Milroy's qualifying W-2 wages paid are $400,000.How much may Milroy take as it QPAD deduction in 2017?

• A)$100,000
• B)$180,000
• C)$200,000
• D)$225,000
• E)$280,000

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Definitions:

Standard Direct Labor-Hours

The predetermined amount of labor time estimated or expected to produce a unit of output, used for budgeting and measuring efficiency.

Labor Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost of labor.

Direct Materials Purchases Variance

Direct materials purchases variance analyzes the difference between the actual cost of materials purchased and the budgeted cost, impacting budgeting and cost control.

Variable Overhead

Those overhead costs that vary in total directly and proportionately with changes in production or activity level.