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Company EJ plans to build a new plant to manufacture bicycles. EJ sells its bicycles in the world market for $400 per bike. It
Company EJ plans to build a new plant to manufacture bicycles. EJ sells its bicycles in the world market for $400 per bike. It could locate the plant in Province P, which levies a 20 percent tax on business income. On the basis of the cost of materials and labor in Province P, EJ estimates that its manufacturing cost per bike would be $212. Alternatively, EJ could locate the plant in Province W, which levies a 16 percent tax on business income. On the basis of the cost of materials and labor in Province W, EJ estimates that its manufacturing cost per bike would be $230. Required: a. Calculate the after-tax profit per bike for each province. b. In which province should Company EJ build its new plant? Complete this question by entering your answers in the tabs below. Required A Required B Calculate the after-tax profit per bike for each province. Note: Deductions should be indicated by a minus sign. Round your intermediate calculations and final answers to the nearest whole dollar amount. Province P: Sale price per bike Manufacturing cost per bike Taxable income Tax After-tax profit per bike Province W: Sale price per bike Manufacturing cost per bike Taxable income Tax After-tax profit per bike Amount
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