Bacon Corporation manufactures an exercise machine at a cost of $800 and sells the machine to Kirby Corporation for $1,000 in 2010.Kirby incurs TV advertising expenses of $300 and sells the machine by phone order for $1,700.If Bacon and Kirby corporations are members of an expanded affiliated group (EAG),their QPAI is:

Question

Quizplus · Accepted Answer

QPAI (Qualified Production Activities Income) is calculated as the difference between the revenue from selling the product and the cost of goods sold, minus any other expenses directly related to the sale. Here, the revenue is $1,700, the cost of goods sold is $800, and the advertising expense is $300. Therefore, QPAI = $1,700 - $800 - $300 = $600.

Bacon Corporation Manufactures an Exercise Machine at a Cost of $800