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pabon corporation sells product to its Ecuadorian subsidiary (marginal tax rates 25%) for $22. the product cost $12to produce in the U.S. ( marginal tax

pabon corporation sells product to its Ecuadorian subsidiary (marginal tax rates 25%) for $22. the product cost $12to produce in the U.S. ( marginal tax rate is 35%)and sells for $32 in Ecuador. if the IRS successfully argues, and Ecuador agrees, that the product should be transfered for $25, by what amount does Pabon's income tax expense increase, or decrease, if 10,000 units are transferred ?

a. -$3,000

b. $7,500

c. $3,000

d. -$1500

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