1. To boost sales, Serenity Massages has decided to create an exciting, new advertising campaign. The advertising firm has already been hired and contracted, but before the campaign is complete, Serenity is evaluating whether to replace its current massage tables with high-tech temperature-sensing smart-tables. The length of massages will remain the same either way, but this additional temperature feature may be exciting to mention in the new campaign. The advertising firm agrees to include this feature in the campaign at no additional charge. In making the keep-or-replace table decision, the following would be considered a relevant cost:
The cost of its current massage tables, purchased five years ago.
The cost of the new advertising campaign.
The cost of hourly employee salaries when performing massages.
The cost of consulting engineers to periodically re-program the new high-tech tables.
2. Under the unitary method of allocating state and local income taxes, a corporation which does business in its home state but also does business in numerous other states is deemed to derive its income from one unitary business. That total income from business operations is then allocated on the basis of the sum of the following three apportionment factors on a state versus total basis:
a. Payroll, Capital Stock and Sales.
b. Payroll, Property and Sales.
c. Property, Capital Stock and Sales.
d. None of the above.