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In another group division K delivers four units of component K (transfer price: 400,-- / unit K) to division X which produces an end
In another group division K delivers four units of component K (transfer price: 400,-- / unit K) to division X which produces an end product X. Product X is sold at px [/ unit X] which contains a profit margin of 4% of the sales price px. Costs information is provided in the figure below which is based on one unit of product X before taxes. Component K Revenues (4K) 1600 v = 400,-- / unit K Product X Revenues -Costs (labour) -Costs (4K) 320 1600 -Costs (labour) 640 -Costs (fossil raw material) 640 Profit Division K 320 Profit Division X Both divisions are located in different country whose (profit) tax rates are 10% in division K- country and 40% in division X country. d) Please calculate the pre-tax profit distribution (in % or in ) between the two divisions.
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