Cardinal corp, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a 10% interest. cardinal also receives interest income of $35,000 from municipal bonds. (the municipality used the proceeds from the bond issue to construct a library.) cardinal borrowed funds to purchase the municipal bonds and pays $20,000 of interest on the loan. excluding these three items, cardinals taxable income is $500,000. cardinal has $150,000 of accumulated e & p at the end of the prior year, and it paid federal income taxes of $200,000 during the year.

a. what is cardinal corporation’s taxable income after these three items are taken into account? 500,000

b. what is cardinal corporations accumulated e & p at the start of the next year?

Speedy auto repairs uses a job-order costing system. the company’s direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics’ hourly wages. speedy’s overhead costs include various items, such as the shop manager’s salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room. the company applies all of its overhead costs to jobs based on direct labor-hours. at the beginning of the year, it made the following estimates: direct labor-hours required to support estimated output 20,000 fixed overhead cost $ 350,000 variable overhead cost per direct labor-hour $ 1.00 required: 1. compute the predetermined overhead rate. 2. during the year, mr. wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. the following information was available with respect to his job: direct materials $ 590 direct labor cost $ 109 direct labor-hours used 6