Alb,Bud,and Coe Constitute an Affiliated Group of Corporations

question 50

Multiple Choice

Alb,Bud,and Coe constitute an affiliated group of corporations.Which of the following tax effects becomes more restrictive if an election is made to file on a consolidated basis?

• A)Choice of members' tax accounting methods.
• B)Use of the lower tax rate brackets.
• C)Use of the $40,000 AMT exemption.
• D)Choice of members' tax year ends.

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Definitions:

MR (Marginal Revenue)

The surplus income obtained by selling an extra unit of a product or service.

MC (Marginal Cost)

The additional cost incurred by producing one more unit of a good or service, critical in determining the optimal level of production.

AVC (Average Variable Cost)

The cost of labor, materials, and other variable expenses divided by the quantity of output produced, excluding fixed costs.

AFC (Average Fixed Cost)

The fixed costs (expenses that do not change with the level of production) divided by the quantity of goods or services produced, typically decreasing as production increases.