Higgins Company plans to incur $350,000 of salaries expense if a capital project is implemented. Assuming a 30% tax rate, the salaries should be reflected in the analysis by a:

Question

Quizplus · Accepted Answer

The correct reflection of the salaries expense in the analysis is a $245,000 outflow. This is because the $350,000 expense, when reduced by the tax savings (30% of $350,000 = $105,000), results in a net cost or outflow of $245,000 ($350,000 - $105,000).

Higgins Company Plans to Incur $350,000 of Salaries Expense If