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Data table Constructing Transfer Chinglish Dirk Torrington Edge Consolidated (Sales) Price per Unit (British pounds) (British pounds) (British pounds) Direct costs 10,000 16,100 Overhead

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Data table Constructing Transfer Chinglish Dirk Torrington Edge Consolidated (Sales) Price per Unit (British pounds) (British pounds) (British pounds) Direct costs 10,000 16,100 Overhead 4,000 1,000 Total costs 14,000 17,100 Desired markup 2,100 2,565 Transfer price (sales price) 16,100 19,665 Income Statement Sales price 32,200,000 39,330,000 Less total costs (28,000,000) (34,200,000) Taxable income 4,200,000 5,130,000 Less taxes (756,000) (1,692,900) 2,448,900 Profit, after-tax 3,444,000 3,437,100 6,881,100 Calculate the profits of Chinglish Dirk and Torrington Edge, and the consolidated results of both, if the markup at Chinglish 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.) Constructing Transfer (Sales) Price per Unit Direct costs Overhead Total costs Desired markup Transfer price (sales price) Chinglish Dirk Torrington Edge Consolidated (British pounds) (British pounds) (British pounds) 10,000 1,750 3,250 11,750 Income Statement Sales price Less total costs Taxable income Less taxes Profit, after-tax 4

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