Kathy Is 48 Years of Age and Self-Employed

question 71

Multiple Choice

Kathy is 48 years of age and self-employed. During 2018 she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities. If Kathy has no other retirement accounts in her name, what is the maximum amount she can contribute to a simplified employee pension (SEP) IRA for 2018? (Round your final answer to the nearest whole number)

• A) $11,152.
• B) $17,152.
• C) $61,000.
• D) $55,000.

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Definitions:

Traditional Costing

An accounting method that applies indirect costs to products based on a predetermined overhead rate, typically simpler than activity-based costing.

Activity-Based Costing

A costing methodology that assigns the costs of resources to products or services based on activities and processes involved in their production.

Traditional Costing Method

A cost accounting method that assigns overhead costs to products based on a predetermined overhead rate.

Direct Labor-Hours

A measure representing the total hours worked by employees directly involved in the production of goods or services.