People Friendly Computer Inc., with headquarters in Nepean, Ontario, manufactures and sells a Required premium desktop computer system. People Friendly has three divisions, each of which is located in a 1. Calculate the after-tax operating income per unit earned by different country. Each division is run as a profit centre. The costs for the work done in each division for a each division under the following transfer-pricing single desktop computer system are as follows: methods: (a) market price, (b) 150% of full cost, and (c) (Click the icon to view the data.) 300% of variable cost. (Income taxes are not included in the computation of the cost-based transfer prices.) 2. Which transfer-pricing method(s) will maximize the after-tax operating income per unit of People Friendly Computer Inc.? Requirement 1. Calculate the after-tax operating income per unit earned by each division under the following transfer-pricing methods: (a) market price, (b) 150% of full cost, and (c) 300% of variable cost. (Income taxes are not included in the computation of the cost-based transfer prices.) Begin with calculating the after-tax operating income for the China division under each method. Then complete the table for South Korea and Canada. (Convert all foreign currencies to Cdn. dollars. Round all amounts to the nearest cent.) Method A Method B Method C Divisions of People Friendly Computer Inc. X China division Division revenue per unit Cost per unit: a. China division-manufactures memory devices and keyboards. Division variable cost per unit b . South Korea division-assembles desktop computers using Division fixed cost per unit internally manufactured parts and memory devices and keyboards from the China Division. Total division cost per unit C. Canada division-packages and distributes desktop computer Division operating income per unit packages. Income tax at 35% Print Done xtTotal division cost per unit Division operating income per unit Income tax at 35% Division net income per unit South Korea division Division revenue per unit Cost per unit: Transferred-in cost per unit Division variable cost per unit Division fixed cost per unit Total division cost per unit Division operating income per unit Income tax at 20%Division operating income per unit Income tax at 20% Division net income per unit Canada division Division revenue per unit Cost per unit: Transferred-in cost per unit Division variable cost per unit Division fixed cost per unit Total division cost per unit Division operating income per unit Income tax at 35% Division net income per unitTransferred-in cost per unit Division variable cost per unit Division fixed cost per unit Total division cost per unit Division operating income per unit Income tax at 35% Division net income per unit Requirement 2. Which transfer-pricing method(s) will maximize the after-tax operating income per unit of People Friendly Computer Inc.? Begin by calculating the total after-tax operating income of People Friendly Computer Inc. under each method. (Enter amounts to the nearest cent.) Method A Method B Method C Total after-tax operating income will maximize the after-tax operating income per unit.X Data table China division Variable cost = 1,080 yuan Fixed cost = 2,070 yuan South Korea division Variable cost = 370,000 won Fixed cost = 500,000 won Canada division Variable cost = 170 CAD Fixed cost = 220 CAD Chinese income tax rate on China division's operating income 35% South Korean income tax rate on South Korea division's operating income 20% Canadian income tax rate on Canada division's operating income 35% Each desktop computer package is sold to retail outlets in Canada for $4,000. Assume that the current foreign exchange rates are as follows: 9 yuan = $1 Cdn. 1,000 won = $1 Cdn. Both the China and the South Korea divisions sell part of their production under a private label. The China division sells the comparable memory/keyboard package used in each People Friendly desktop computer to a Chinese manufacturer for 3,600 yuan. The South Korea division sells the comparable desktop computer package to a South Korean distributor for 1, 480,000 won. Print Done