Global income tax minimization and multinational transfer price question

Computer Co. with office headquarters in Edmonton, Alberta, manufactures and sells a premium desktop computer system. Computer Co has the following three divisions:

Division in China - manufactures memory devices and keyboards. Division in South Korea - manufactures the remaining parts and assembles desktop

computers using memory devices and keyboards from the China division.

Canadian division packages and distributes desktops computers. The costs data are listed below:

China division: VC = 1,000 yuan FC = 1,800 yuan

South Korea division: VC = 360,000 won FC = 480,000 won

Canada division: VC = CA$100 FC = CA$200

Chinese income tax rate on operating income is 20% South Korean 20% Canadian 30%

Assume that each computer is sold in Canada for $3,200. Also, assume that the current foreign exchange rates are:

8 yuan = CA$1

1,200 won = CA$1

The China division sells the memory and keyboard package to a South Korean division for 3,600 yuan (market price through under a private label, which means there are no other external sales). The South Korea division sells the desktop to Canadian Division for 1,560,000 won (market price, also under the private label).

Required:

1. Compute the after-tax operating income per unit earned by each division under market transfer-pricing methods: a) market price, b) 200% of full cost, and c) 300% of variable costs.

2. Which transfer-pricing method will maximize the after-tax operating income per unit of Computer Co?

Any help would be greatly appreciated :)