During 2017, Mark's employer withheld $2,000 from his wages for state income tax. Mark claimed the $2,000 as an itemized deduction on his 2017 federal income tax return. His total itemized deductions for 2017 were $9,000 (the 2017 standard deduction was $6,350). Mark's taxable income for 2017 was a negative $20,000 due to substantial business losses. Mark received the $2,000 as a refund from the
state during 2018. What amount must Mark include in income in 2018?
A) $0
B) $1,000
C) $2,000
D) $6,000
A) $0
Since Mark would have owed no income tax even without the state tax deduction, the refund is not taxable. He received no tax benefit.
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Carcana Corporation has two manufacturing departments--Machining and Finishing. The company used the following data at the beginning of the period to calculate predetermined overhead rates:??MachiningFinishingTotal?Estimated total machine-hours (MHs)1,0004,0005,000?Estimated total fixed manufacturing overhead cost$4,200$8,800$13,000?Estimated variable manufacturing overhead cost per MH$1.90$2.90?During the period, the company started and completed two jobs--Job E and Job G. Data concerning those two jobs follow:??Job EJob G?Direct materials$11,800$8,000?Direct labor cost$19,200$6,700?Machining machine-hours700300?Finishing machine-hours1,6002,400Required:a. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation
base in both departments. What is the departmental predetermined overhead rate in the Machining department?b. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Finishing department?c. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job E?d. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job G?e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 80% on manufacturing cost to establish selling prices. Calculate the selling price for Job E.f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 80% on manufacturing cost to establish selling prices. Calculate the selling price for Job G.g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. If both jobs were sold during the month, what was the company's cost of goods sold for the month? What will be an ideal response?