Several years ago, the 22 workers of a dairy operation purchased their farm from retiring owners and restructured it as a cooperative to keep the business running. Has an annual revenue of $3,385,000 and operating expenses of $2,870,000. Net revenue is distributed equally among the members.

In order to more efficiently manage herd health, the dairy operation wants to invest in smart-collar sensors for each of their dairy cows. The sensors are estimated to increase the farms real net revenue by $92,000 annually.

The current income tax schedule is shown below.

i. How much would this investment in smart collar sensors increase each members share of net revenue?

a. $15,852

b. $3,461

c. $4,182

d. $3,764

e. None of the above

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ii. Emma receives a salary of $23,500 for her role as a filler operator in addition to her income as an owner and income from the sensor investment. What would her tax liability be after the investment?

a. $7,834

b. $5,629

c. $3,322

d. $6,812

e. None of the above

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iii. Calculate Emmas average tax rate.

a. 22.00%

b. 11.78%

c. 16.59%

d. 16.00%

e. None of the above

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iv. Ernesto receives a salary of $54,200 for his role as herd health specialist in addition to his income as an owner and income from the sensor investment. What would be his after-tax income after the investment?

a. $68,225

b. $63,797

c. $58,382

d. $81,791

e. None of the above

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v. Suppose members were only paid wages and just one individual, Adam, received all the net revenue. Calculate Adams average tax rate after the investment if his income was $63,000 in addition to the net farm income and income from the sensor investment.

a. 39.60%

b. 31.34%

c. 24.00%

d. 33.25%

e. None of the above

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