AYTP 2014 Test

Retiree lauds ARM over pension services – Daily Trust

A company into the production of record type in korea. Their current sales is at about 69% with a poor relation with the community. The company's employees are non-local because of the community lack of skilled workers. This has increased the cost of living in that community because of the high salary being paid to the foreign workers thereby increasing the product's price.

The chairman has been given three schemes which are as follows:

1) the company's plan to build an health centre that will cost £300000 so as to serve the community.               
2) the company is to pay for an orchestra who are to do some concert in france that will cost £200000.                   3) the company is to pay for an advertisement that will last for 2yrs on a TV where the champion club plays. This will cost £250000.              

The tax implication for the three schemes are:
1) no tax save; 
2) the tax to pay £50000, 
3) the tax save is £100000.   

Also the three schemes will have the followings effect; 

1) scare effect on sale.                         
2) moderate effect on sale. 
3) high effect on sale with much hooligans as a result of the popularity of cricket in that community.                        

Question: the company's chairman has called you to advise him in order to know what to say when the board of directors meet. What scheme will you select and give reasons for selecting such scheme.


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