Assume That a Person Earns $600 Per Day at a Certain

question 51

Multiple Choice

Assume that a person earns $600 per day at a certain job. If the marginal tax rate is cut from 40% to 30%, then this person's after-tax daily earnings will:

• A) Decrease from $240 to $180
• B) Increase from $480 to $540
• C) Decrease from $540 to $480
• D) Increase from $360 to $420

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Definitions:

Sunk Cost

Costs that have already been incurred and cannot be recovered or altered, and should not affect future business decisions.

Relevant Cost

Costs that will be affected by a decision in the future and therefore should be considered in decision-making processes.

Sell or Process Further

A decision-making process used in managerial accounting to determine whether it is more profitable to sell a product as is or process it further.

Incremental Revenue

The additional revenue generated from a new business action or decision, beyond the existing revenue stream.