Cambridge, Inc. conducts business in states X and Y. This year, its before-tax income was $150,000. Below is information regarding its sales, payroll, and property factors in both states. XYTotalGross receipts/sales$325,000 $75,000 $400,000 Payroll 90,000 10,000 100,000 Property 200,000 50,000 250,000 Both states apply an equally-weighted three-factor formula to apportion income. State X has a 10% corporate income tax and state Y has a 5% corporate income tax. Compute the state tax savings if Cambridge could relocate $100,000 of property and $50,000 of payroll from state X to state Y.
A. $2,250
B. $9,094
C. $11,532
D. $12,563
Answer: A
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