P Company manufactures laptops in the United States at a production cost of $300 per unit and sells them to a wholly owned sales subsidiary in China. The subsidiary sells the laptops at a price of $500.

Other distributors of laptops in China normally earn a gross profit equal to 20% of selling price. Which of the following would be an acceptable transfer price under the resale price method?

$400

$300

$350

$420

P Companys main competitor in the United States sells laptops at an average 40% markup on cost. Which of the following would be an acceptable transfer price under the cost-plus method?

$420

$300

$350

$400

The subsidiary incurs operating costs, other than cost of goods sold, that average $100 per unit sold. The average operating profit margin earned by distributors of laptops in China is 10%.Which of the following would be an acceptable transfer price under the comparable profits method?

$350

$300

$400

$420