International Accounting 321

Adams Company imports wooden parts om its Canadian subsidiary that are used in the production of children's toys. Per unit, part AAll costs the Canadian subsidiary $2.00 to produce and $0.40 to ship to Adams Company. Adams Company uses part AAll to produce a toy buzzle that it sells to U.S. toy stores for $8.50 per unit. The following tax rates apply: Canadian income tax 33 % U.S. income tax 35% U.S. import slut},r 10% of invoice price Rguirgg: 1. If part M11 is sold to Adams Company at a price of $3.50 per unit, determine the total amount of: a) Net income. 13) Taxes and duties paid to the U.S. and Canadian governments. 2. If part M11 is sold to Adams Company at a price of $3.30 per unit, determine the total amount of: a) Net income. h) Taxes and duties paid to the U.S. and Canadian governments. 3. Explain why the resalts obtained in parts (1) and (2) differ