Dirk,who Uses the Cash Method of Accounting,lives in a State

question 60

Multiple Choice

Dirk,who uses the cash method of accounting,lives in a state that imposes an income tax (including withholding from wages) .On April 14,2011,he files his state return for 2010,paying an additional $800 in state income taxes.During 2011,his withholdings for state income tax purposes amount to $4,550.On April 13,2012,he files his state return for 2011,claiming a refund of $900.Dirk receives the refund on August 3,2012.If he itemizes deductions,how much may Dirk claim as a deduction for state income taxes on his Federal income tax return for calendar year 2011 (filed in April 2012) ?

• A) $4,450.
• B) $4,550.
• C) $5,350.
• D) $6,250.
• E) None of the above.

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Definitions:

Relevant Range

The span of operations in which the beliefs regarding variable and fixed cost dynamics are accurate.

Product Costs

Costs directly associated with the production of goods, including direct labor, materials, and manufacturing overhead.

Period Costs

Costs that are expensed in the period in which they are incurred, not directly tied to the production process.

Contribution Margin

The difference between sales revenue and variable costs, showing how much revenue contributes towards covering fixed costs and profit.