Chinglish Dirk (C). Chinglish Dirk Company (Hong Kong) exports vazor blades to its wholly owned parent company. Totrington Edge (Great Britain), Hong Kong tax rates are 16% and British tax rates are 32% The markup was 15% and the sales volume was 1000 units Chinplish calculates its profit per container as follows (al values in British pounds) Corporate management of Torrington Edge wishes to reposition prottin Hong Kong. It is, however, faoing to constraints. First, the final sales price in Great Britain must be 20,000 or loss to remain competitive. Secondly, the British tax authorities in working with Torrington Edge's cost accounting staff has established a maximum transfer price allowed (from Hong Kong) of 17.800. Not to leave any potential tax repositioning opportunities unexplored, Torrington Edge wants to combine the components described above with a redistribution of overhead costs. If overhead costs could be reallocated between the two units, but still total 5,000 per unit, and maintain a minimum of 1,750 per unit in Hong Kong, prove that the optimal combination of mar cups is a 35,0% markup at Chinglish and an 4 64% 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 end Torrington Edge, and the consolidated results of both of the markup at Chingish was increased to 35.0% and the markup at Torrington was reduced to 4 64% in the following table. (Round to the nearest British pound) Chinglish Dirk (British pounds) 10.000 Torrington Edge (British pounds) Consolidated (British pounds E Constructing Transfer (Sales) Price per Unit Direct costs Overhead Total coats Desired markup Transfer price (sales price) 1.750 3.250 11.750 Income Statement Sales price Less total costs Taxable income Lessos Profit, after-tax Whal is the impact of this repositioning on consolidated after-tax profits and total tax payments? By both increasing the markup in Hong Kong (and decreasing it in Great Britain and reallocating over head cost to Great Britain, Torrington's consolidated profits improve once again by positioning profits Dosses) in the low-tax high tag environments. Note that this is an extreme result A35% markup in Hong Kong with only a 4 64% markup in Great Britain would probably in the end raise the attention of the British ac authorities The statement above is (Select from the drop down menu.) Data table Constructing Transfer (Sales) Price per Unit Direct costs Tomington Edge (British pounds) Consolidated (British pounds) Chinglish Dirk (British pounds) 10,000 4.000 16.100 Overhead 1.000 Total costs 2. G 174100 14.000 100 Desired markup 2565 19.665 Transfer price sales price) 15.00 Income Statement Sates price 15.100.000 Less total costs Taxable income 19 685.000 17 100.000 2565.000 (14.000.000) 2.100.000 336.000 1.764,000 Less taxes Profit, after-ta 1.158 800 (820.800 1744 200 3.508, 200