Somerville Corp typically sells computer chips for $250 each. To try to increase sales they run a buy one get one free offer for month. The budgeted sales for the month were 200 units. Due to the sale, they sell 400 total units (200 at regular cost and 200 free). The direct materials costs per chip is $50 and the direct labor costs are $75. The sales spending and sales volume variances are:

You are chairman of the board of a successful technology firm. there is a nominal federal corporate tax rate of 35 percent, yet the effective tax rate of the typical corporation is about 12.6%. your firm has been clever with use of transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time period, profits were $28 billion. one member of the board feels that it is un-american to use various accounting strategies in order to avoid paying taxes. others feel that these are legal loopholes and corporations have a fiduciary responsibility to minimize taxes. one board member quoted what the ceo of exxon once said: “i’m not a u.s. company and i don’t make decisions based on what’s good for the u.s.” what are the alternatives? what are your recommendations? why do you recommend this course of action?