Kevin,single,is an Employee of the Colonial Company and Is an Active

question 76

Multiple Choice

Kevin,single,is an employee of the Colonial Company and is an active participant in its pension plan.Kevin's adjusted gross income for the current year is $51,000.Kevin contributes $1,000 to his conventional individual retirement account.Which of the following statements about Kevin contributions and deduction amounts is (are) true?
I.He is allowed to deduct his $1,000 contribution to his conventional IRA.
II.Kevin can also contribute but not deduct $4,500 to his Roth IRA.

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Fixed Costs

Expenses that do not vary with the level of production or sales over the short term.

Management by Exception

A management strategy where managers only intervene in decision making when performance deviates significantly from standards, allowing more focus on important issues.

Controllable

Refers to costs or elements within a business that can be directly managed, influenced, or altered by decisions of management.

Noncontrollable

Refers to expenses or influences that cannot be altered or changed by the management due to external constraints or fixed contract terms.