15.6 Chinglish Dirk

Encouraged by the results from the previous problems analysis, corporate management of Torrington Edge wishes to continue to reposition profit in Hong Kong. It is, however, facing two constraints. First, the final sales price in Great Britain must be 20,000 or less to remain competitive. Secondly, the British tax authoritiesin working with Torrington Edges cost accounting staffhas established a maximum transfer price allowed (from Hong Kong) of 17,800. What combination of markups do you recommend for Torrington Edge to institute? What is the impact of this repositioning on consolidated profits on after-tax and total tax payments?