CHAPTER 9 INTERNATIONAL TRANSFER PRICING Problems Use the following information to complete questions #10-#11: U.S. based Babcock Company manufactures ovens at a production cost of $750 per unit and sells them to uncontrolled distributors in the U.S. and one of its wholly-owned subsidiaries in Canada. Babcock's U.S. distributors sell the ovens to restaurants at a price of $1,000, and its Canadian subsidiary sells the ovens at a price of $1,200. Other distributors of ovens to restaurants in Canada normally earn a gross profit equal to 20% of selling price. Babcock's main U.S. competitor sells ovens at an average 50% markup on cost. Babcock's Canadian subsidiary incurs operating costs, other than cost of goods sold, that average $400 per oven sold. The average operating profit margin earned by Canadian distributors of ovens is 8.5%. Required: 10) What would be the acceptable transfer price under the cost-plus method? Your Response (show your work): Required: 11) What would be the acceptable transfer price under the comparable profits method? Your Response (show your work): 000.000