GenTrac Global Inc. manufactures robotic controllers in Division A, a country with a 30% income tax rate, and transfers them to Division B, a country with a 40% income tax. An import duty of 15% of the transfer price is paid on all imported products. The import duty is not deductible in computing taxable income. The controller’s full cost is $1,800 and the variable cost is $1,000; they are sold by Division B for $2,100. The tax authorities in both countries allow firms to use either variable cost or full cost as the transfer price.

Here is my excel spreadsheet

	Full Cost		Variable Cost
Division A Taxes:
Transfer Price	1800		1000
Less Cost
Taxable Income	1800		1000
Taxes in Low Country (or refund)
Division B Taxes:
Sales Price	2100
Less Transfer Price
Taxable Income	2100		0
Income Taxes
Import Duty
Taxes in High Country (or refund)	0		0
Total Taxes