Kaili Razor (C). Not to leave any potential tax repositioning opportunities unexplored, Supermax wants to combine the components of Problem 15.6 with a redistribution of overhead costs. If overhead costs could be reallocated between the two units, but still total 6,300, and maintain a minimum of 3,800 per unit in Hong Kong, what is the impact of this repositioning on consolidated profits after tax and total tax payments?

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Constructing Transfer (Sales) Price per Unit Direct costs Kaili Razor Supermax (British pounds) (British pounds) 15,000 22,425 Overhead 4,500 1,800 Total costs 19,500 24,225 Desired markup 2,925 3,634 Transfer price 22,425 27,859 (sales price) Income Statement Sales price 22,425,000 27,858,750 Less total costs (19,500,000) (24,225,000) Taxable income 2,925,000 3,633,750 Less taxes (585,000) (1,017,450) Profit, after-tax 2,340,000 2,616,300