Homework: Week #5 Chapter #10 Homework Question 21, E10-36 (similar to) Part 1 of 2 Requirements Watford International has production and marketing divisions throughout the world. It produces one particular product in Ireland, where the income tax rate is 30%, and transfers it to a marketing division in Japan, where the income tax rate is 47%. Assume that Japan places an import tax of 15% on the product and that import duties are not deductible for income tax purposes. The variable cost of the product is 800 and the full cost is 1,200. Suppose the company can legally select a transfer price anywhere between the variable and full cost. Read the requirements. Requirement 1. What transfer price should Watford International use to minimize taxes? Explain why this is the tax-minimizing transfer price. Watford is better off using a 1200 transfer price. That transfer price places an extra 800 of income in C Print Ireland where the taxes are lower than in Japan 1. What transfer price should Watford International use to minimize taxes? Explain why this the transfer price. 2. Compute the amount of taxes saved by using the transfer price in requirement 1 instead of the transfer price that would result in the highest taxes. Done HW Score: 70.91%, 28.36 of 40 points Points: 0.36 of 2 X Save