Alpha Corporation Owns 100 Percent of Beta Company, and Beta

question 73

Multiple Choice

Alpha Corporation owns 100 percent of Beta Company, and Beta owns 80 percent of Gamma, Inc., all of which are domestic corporations. Information for the three companies for the year ending December 31, 2011 follows:
-What is Gamma's accrual-based income for 2011?

• A) $76,000.
• B) $80,000.
• C) $96,000.
• D) $100,000.
• E) $104,000.

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Definitions:

Rent

A payment made periodically by a tenant to a landlord in exchange for the use of land, a building, or another property.

Fixed Costs

Costs that do not change with the level of output in the short term, such as rent, salaries, and insurance.

Variable Costs

Costs that vary directly with the level of production, such as materials and labor.

MC

In economics, MC typically refers to Marginal Cost, which is the cost of producing one more unit of a good.