Chinglish Dirk (A). Chinglish Dirk Company (Hong Kong) exports razor blades to its wholly owned parent company, Torrington Edge (Great Britain). Hong Kong tax rates are 18% and British tax rates are 30%. The markup was 15% and the sales volume was 1,500 units. Chinglish calculates its profit per container as follows (all values in British pounds): Corporate management of Torrington Edge is considering repositioning profits within the multinational company. What happens to the profits of Chinglish Dirk and Torrington Edge, and the consolidated results of both, if the markup at Chinglish was increased to 20% and the markup at Torrington was reduced to 10%? What is the impact of this repositioning on consolidated after-tax profit and total tax payments? Calculate the profits of Chinglish Dirk and Torrington Edge, and the consolidated results of both, if the markup at Chinglish was increased to 20% and the markup at Torrington was reduced to 10% in the following table: (Round to the nearest British pound.) Constructing Transfer (Sales) Price per Unit Chinglish Dirk (British pounds) Consolidated Torrington Edge (British pounds) (British pounds) 12,000 3,800 1,200 15,800 Direct costs Overhead Total costs Desired markup Transfer price (sales price) Income Statement Sales price E Less total costs Taxable income Less taxes Profit, after-tax (Click on the following icon in order to copy its contents into a spreadsheet.) Constructing Transfer Chinglish Dirk Torrington Edge Consolidated (Sales) Price per Unit (British pounds) (British pounds) (British pounds) Direct costs 12,000 18,170 Overhead 3,800 1,200 Total costs 15,800 19,370 Desired markup 2,370 2,906 Transfer price (sales price) 18,170 22,276 Income Statement Sales price 27,255,000 33,414,000 Less total costs (23,700,000) (29,055,000) Taxable income 3,555,000 4,359,000 Less taxes (639,900) (1,307,700) 1,947,600 Profit, after-tax 2,915,100 3,051,300 5,966,400