Chinglish Dirk (B). 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 3,000 units. Chinglish calculates its profit per container as follows (all values in British pounds) Corporate management of Torrington Edge wishes to reposition profit in Hong Kong. It is, however, facing two constraints. First, the final sales price in Great Britain must be 20,000 or less to remain competitive. Secondly, the British tax authoritiesin working with Torrington Edge's cost accounting staff-has established a maximum transfer price allowed (from Hong Kong) of 17,800. Prove that the optimal combination of markups is a 25.0% markup at Chinglish and an 8.1% markup in Torrington Edge. What is the impact of this repositioning on consolidated after-tax profits 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 25.0% and the markup at Torrington was reduced to 8.1% in the following table: (Round to the nearest cent.) Consolidated Constructing Transfer (Sales) Price per Unit Chinglish Dirk (British pounds) 10.000 Torrington Edge (British pounds) (British pounds) - X Data table Direct costs f Overhead 4,000 1,000 Total costs f 14,000 Constructing Transfer (Sales) Price per Unit Consolidated (British pounds) Desired markup Transfer price (sales price) Chinglish Dirk (British pounds) 10,000 4,000 Torrington Edge (British pounds) 16,100 f f Direct costs f Overhead 1,000 Income Statement Total costs f 14,000 17,100 Sales price f f 2,100 2,565 Desired markup Transfer price (sales price) Less total costs f 16,100 19,665 Taxable income f f Less taxes Profit, after-tax f 58.995,000 Income Statement Sales price Less total costs Taxable income 48,300,000 (42,000,000) 6,300,000 f (51,300,000) 7,695,000 (2,308,500) 5,386,500 3,442,500 Less taxes Profit, after-tax (1,134,000) 5,166,000 f 10,552,500 Print Done