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Nina [5.8K]
3 years ago
11

In its first year of operations, Woodmount Corporation reported pretax accounting income of $500 million for the current year. D

epreciation reported in the tax return in excess of depreciation in the income statement was $60 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 40% will be reduced under the current law to 35% next year and 30% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be:
A. $21 million.
B. $24 million.
C. $18 million.
D. $19 million
Business
1 answer:
Keith_Richards [23]3 years ago
7 0

Answer:

D. $19 million

Explanation:

The computation of the deferred tax liability for three years is shown below:

Total depreciation would be $60 million

For each year it would be = $60 million ÷ 3 years = $20 million

For the first year, it would be

= $20 million × 35%

= $7 million

For  the second year, it would be

= $20 million × 30%

= $6 million

the first year, it would be

= $20 million × 30%

= $6 million

So, the total would be

= $7 million + $6 million + $6 million

= $19 million

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3 years ago
A brewery produced regular beer and a low carb "light beer". Steady Customers of the brewery buy 10 units of regular beer and 15
Svet_ta [14]

Answer:

                                                Regular     Low Carb      Total

a) Units to be produced               20              22             42

(to minimize total production cost)

b) Total production costs    $704,000   $1,150,000   $1,854,000

Explanation:

a) Data and Calculations:

                                                Regular     Low Carb

Monthly customers demand         10              15

Ratio of customers demand        40%           60%

Cost per unit                           $32,000      $50,000

Revenue per unit                    120,000      300,000

Contribution per unit            $88,000    $250,000

Total required revenue = $9,000,000

With 20 additional units of beer, total units produced = 45 (25 + 20)

To minimize production costs and generate a total revenue of $9,000,000, more of the units that cost less should be produced.  Units should be produced according to the following ratio:

                                                   Regular       Low Carb       Total

New Production and Sales units  20                   22             42

                                         

Total production cost =       $640,000         $1,100,000         $1,740,000

                                       ($32,000 * 20)       ($50,000 * 22)

Total revenue =               $2,400,000        $6,600,000     $9,000,000

                                      ($120,000 * 20)      ($300,000 * 22)

To achieve a minimum revenue of $9,500,000,

New production units                  22                   23                  45

Total production cost =     $704,000         $1,150,000        $1,854,000

Total revenue =                2,640,000         6,900,000         9,540,000

3 0
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