Akku Company imports die-cast parts from its German subsidiary that are used in the production of children's toys. Per unit, part 169 costs the German subsidiary $1.00 to produce and $0,20 to ship to Akku Company. Akku Company uses part 169 to produce a toy airplane that t sellsto US, toy stores fof s4 50 per unit. The following tax rates apply: 12 40% 35% 10% ofinvoice price U.S, income tax... U.S. import duty... Required .a. Determine the total amount of taxes and duties paid to the U.S. and German governments if part 169 is sold to Akku Company at a price of $1.50 per unit Akku Company at a price of $1.80 per unit. b. Determine the total amount of taxes and duties paid to the U.S. and German governments if part 169 is sold to c. Explain why the resplts obtained in parts (a) and (b) differ Answer 15. Akku Compan b. $1.80 transfer price a $1.50 transfer pric ermany US Total ny US Total $4.50 $4.50 $1 $4.50 $1 Sales price Production cost 1.00 - 0.20 1.00 0.20 0.0 1.8 1.00 0.20 0.00 0.1 0.20 0.15 $3.15 Shipping cost Import duty Pre-tax income Tax Net income Total tax and import duty . $3.12 C0.24 1.12 (e.i2+ 98 $036 $164 $2.00 $0.18 185$2.03 o$1.27 c. The lower transfer price ($1.50 vs. $1.80) result $1.30 35 lo amount of total income tax and duty because less pre-tax income is reported in Germany, the higher tax country, and a smaller amour of import duty is paid in the United States Akku Company imports die-cast parts from its German subsidiary that are used in the production of children's toys. Per unit, part 169 costs the German subsidiary $1.00 to produce and $0,20 to ship to Akku Company. Akku Company uses part 169 to produce a toy airplane that t sellsto US, toy stores fof s4 50 per unit. The following tax rates apply: 12 40% 35% 10% ofinvoice price U.S, income tax... U.S. import duty... Required .a. Determine the total amount of taxes and duties paid to the U.S. and German governments if part 169 is sold to Akku Company at a price of $1.50 per unit Akku Company at a price of $1.80 per unit. b. Determine the total amount of taxes and duties paid to the U.S. and German governments if part 169 is sold to c. Explain why the resplts obtained in parts (a) and (b) differ Answer 15. Akku Compan b. $1.80 transfer price a $1.50 transfer pric ermany US Total ny US Total $4.50 $4.50 $1 $4.50 $1 Sales price Production cost 1.00 - 0.20 1.00 0.20 0.0 1.8 1.00 0.20 0.00 0.1 0.20 0.15 $3.15 Shipping cost Import duty Pre-tax income Tax Net income Total tax and import duty . $3.12 C0.24 1.12 (e.i2+ 98 $036 $164 $2.00 $0.18 185$2.03 o$1.27 c. The lower transfer price ($1.50 vs. $1.80) result $1.30 35 lo amount of total income tax and duty because less pre-tax income is reported in Germany, the higher tax country, and a smaller amour of import duty is paid in the United States