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Chapter 23: Q9BTN (page 1063)

Samsung’s 2016 Corporate Sustainability Report notes that the company spent 523 billion Korean won in 2015 for programs devoted to better health and education for children.

Required

Explain why a company like Samsung would pursue such a costly program

Short Answer

Expert verified

The company also spent on these programs to save the tax.

Step by step solution

01

Definition of programs devoted to health and education for children

The program is devoted to the health and education of children means those programs that are run by the company to improve the health and the education of children.

02

Reason for pursuing such a costly program

Samsung spent a large amount on better health and education for children because the company wants to make goodwill in society for this reason the company spent a huge amount of the money. When the company purses this type of program in the society a good face of the company creates in the society. This will affect the sale of the company because from this more customers attracted to the company’s products.

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Most popular questions from this chapter

A company must decide between scrapping or reworking units that do not pass inspection. The company has 22,000 defective units that cost \(6 per unit to manufacture. The units can be sold as is for \)2.00 each, or theycan be reworked for \(4.50 each and then sold for the full price of \)8.50 each. If the units are sold as is, the company will be able to build 22,000 replacement units at a cost of \(6 each, and sell them at the full price of \)8.50 each. (1) What is the incremental income from selling the units as scrap? (2) What is the incremental income from reworking and selling the units? (3) Should the company sell the units as scrap or rework them?

Refer to the data in QS 23-1. Based on financial considerations alone, should Helix accept this order at the special price? Explain.

Santana Rey has found that Business Solutions’s line of computer desks and chairs has become very popular, and she is finding it hard to keep up with demand. She knows that she cannot fill all of her

orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows. Santana has determined that she only has 1,015 direct labor hours available for the next quarter and wants to optimize her contribution margin given the limited number of direct labor hours available.

Selling price per unit . \(1,125 \)375

Variable costs per unit 500 200

Contribution margin per unit . \( 625 \)175

Direct labor hours per unit . 5 hours 4 hours

Expected demand for next quarter 175 desks 50 chairs

Required

Determine the optimal sales mix and the contribution margin the business will earn at that sales mix.

Apple currently chooses to buy (mainly from suppliers located in Asia)—rather than make— nearly all of its manufactured products. Assume you have been asked to analyze whether Apple should instead make its products.

Required

1. Provide examples of relevant costs that Apple should consider in this make or buy decision.

2. Provide examples of qualitative (nonfinancial) factors Apple should consider in this decision.

Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is two units per hour and for Product MTV is five units per hour. The machine’s capacity is 2,750hours per year. Both products are sold to a single customer who has agreed to buy all of the company’s output up to a maximum of 4,700 units of Product TLX and 2,500 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. Determine (1) the company’s most profitable sales mix and (2) the contribution margin that results from that sales mix.

\(s per unit Product TLX Product MTV

Selling price per unit . \)15.00 $9.50

Variable costs per unit 4.80 5.50
See all solutions

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