Question
ABC limited (An Australian company) imports die-cast parts from its Chinese subsidiary that are used in the production of childrens toys. Per unit, part 126
ABC limited (An Australian company) imports die-cast parts from its Chinese subsidiary that are used in the production of childrens toys. Per unit, part 126 costs the Chinese subsidiary AUD $200 and AUD $20 to ship to ABC limited.
ABC limited uses part 126 to produce a toy airplane that it sell to local stores for AUD $600 per unit. The following tax rates apply:
Chinese income tax: 25% Australian income tax: 30% Australian import duty: 10% of invoice price Required:
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Calculate the total amount of income taxs and import duties paid to the Australian and Chinese government if part 126 is sold to ABC limited at the price of AUD $300 per unit
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Calculate the total amount of income taxs and import duties paid to the Australian and Chinese government if part 126 is sold to ABC limited at the price of AUD $400 per unit
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Explain why the results got in part (a) and (b) differ
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