36% 42% 14% U.S. income tax rate on the U.S. division's operating income German income tax rate on the German division's operating income German import duty Variable manufacturing cost per router $ Full manufacturing cost per router $ Selling price (net of marketing and distribution costs) in Germany $ 265 390 565 1. Calculate the after-tax operating income earned by the United States and German divisions from transferring 125,000 broadband routers (a) at full manufacturing cost per unit and (b) at market price of comparable imports. (Income taxes are not included in the computation of the cost-based transfer prices.) 2. Which transfer price should the Vision Company select to minimize the total of company import duties and income taxes? Remember that the transfer price must be between the full manufacturing cost per unit of $390 and the market price of $465 of comparable imports into Germany. Explain your reasoning The Vision Company manufactures telecommunications equipment at its plant in Scranton, Pennsylvania. The company has marketing divisions throughout the world. A Vision marketing division in Hamburg, Germany, imports 125,000 broadband routers from the United States. The information about the router is available in the accompanying table. (Click the icon for the router information.) Suppose the United States and German tax authorities only allow transfer prices that are between the full manufacturing cost per unit of $390 and a market price of $465, based on comparable imports into Germany. The German import duty is charged on the price at which the product is transferred into Germany. Any import duty paid to the German authorities is a deductible expense for calculating German income taxes. Required Requirement 1a. Calculate the after-tax operating income earned by the United States and German divisions from transferring 125,000 broadband routers at full manufacturing cost per unit. (Income taxes are not included in the computation of the cost-based transfer prices.) (Round your final answer to the nearest whole dollar. Use parentheses or a minus sign for a negative value.) The after-tax operating income earned by the United States and German divisions from transferring the broadband routers using the full manufacturing cost per unit is $ Requirement 1b. Calculate the after-tax operating income earned by the United States and German divisions from transferring 125,000 broadband routers at market price of comparable imports. (Income taxes are not included in the computation of the cost-based transfer prices.) (Round your final answer to the nearest whole dollar. Use parentheses or a minus sign for a negative value.) The after-tax operating income earned by the United States and German divisions from transferring the broadband routers using the market price of comparable imports is $. Requirement 2. Which transfer price should the Questron Company select to minimize the total of company import duties and income taxes? Remember that the transfer price must be between the full manufacturing cost per unit of $390 and the market price of $465 of comparable imports into Germany. Explain your reasoning. Vision Company will minimize import duties and income taxes by setting the transfer price at its minimum level of $ 390, the full manufacturing cost. 36% 42% 14% U.S. income tax rate on the U.S. division's operating income German income tax rate on the German division's operating income German import duty Variable manufacturing cost per router $ Full manufacturing cost per router $ Selling price (net of marketing and distribution costs) in Germany $ 265 390 565 1. Calculate the after-tax operating income earned by the United States and German divisions from transferring 125,000 broadband routers (a) at full manufacturing cost per unit and (b) at market price of comparable imports. (Income taxes are not included in the computation of the cost-based transfer prices.) 2. Which transfer price should the Vision Company select to minimize the total of company import duties and income taxes? Remember that the transfer price must be between the full manufacturing cost per unit of $390 and the market price of $465 of comparable imports into Germany. Explain your reasoning The Vision Company manufactures telecommunications equipment at its plant in Scranton, Pennsylvania. The company has marketing divisions throughout the world. A Vision marketing division in Hamburg, Germany, imports 125,000 broadband routers from the United States. The information about the router is available in the accompanying table. (Click the icon for the router information.) Suppose the United States and German tax authorities only allow transfer prices that are between the full manufacturing cost per unit of $390 and a market price of $465, based on comparable imports into Germany. The German import duty is charged on the price at which the product is transferred into Germany. Any import duty paid to the German authorities is a deductible expense for calculating German income taxes. Required Requirement 1a. Calculate the after-tax operating income earned by the United States and German divisions from transferring 125,000 broadband routers at full manufacturing cost per unit. (Income taxes are not included in the computation of the cost-based transfer prices.) (Round your final answer to the nearest whole dollar. Use parentheses or a minus sign for a negative value.) The after-tax operating income earned by the United States and German divisions from transferring the broadband routers using the full manufacturing cost per unit is $ Requirement 1b. Calculate the after-tax operating income earned by the United States and German divisions from transferring 125,000 broadband routers at market price of comparable imports. (Income taxes are not included in the computation of the cost-based transfer prices.) (Round your final answer to the nearest whole dollar. Use parentheses or a minus sign for a negative value.) The after-tax operating income earned by the United States and German divisions from transferring the broadband routers using the market price of comparable imports is $. Requirement 2. Which transfer price should the Questron Company select to minimize the total of company import duties and income taxes? Remember that the transfer price must be between the full manufacturing cost per unit of $390 and the market price of $465 of comparable imports into Germany. Explain your reasoning. Vision Company will minimize import duties and income taxes by setting the transfer price at its minimum level of $ 390, the full manufacturing cost
