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Question - Larry, age 32, works for Horizon Corporation. His annual salary is $60,000. Horizon provides the following benefits to all employees:
Group term life insurance (each employee is provided with $80,000 worth of coverage that costs Horizon $120 per employee)
Medical insurance (the cost of Larry's policy is $2,100)
Qualified pension plan (Horizon matches employee contributions up to $2,500. Larry contributes 7 percent of his salary to the plan.)
Qualified award program (Larry received a watch Horizon purchased for $100 to recognize his 5 years of service with Horizon.)
How much income must Larry recognize and how much can Horizon Corporation deduct in the current year?
Explain the difference between fixed and variable costs and the impact on decision making of an accurate understanding of the differences
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