The local printing company purchases a new copy machine that reduces the cost of making a color copy by ten cents a copy.It normally makes 50,000 color copies a year and is in the 28 percent income tax bracket.The total benefits that this company will expect to realize is

Question

Quizplus · Accepted Answer

The company normally makes 50,000 color copies a year, so the cost reduction of ten cents per copy is equal to a savings of $5,000 ($0.10 per copy x 50,000 copies).

Since the company is in the 28% income tax bracket, the total tax savings from this cost reduction would be $1,400 ($5,000 x 0.28).

Therefore, the total benefits that the company will expect to realize is $6,400 ($5,000 + $1,400).

Therefore, the best choice is B, with an expected benefit of $6,400.

The Local Printing Company Purchases a New Copy Machine That