People Friendly Computer, Inc, with headquartors in San Francisco. Requirements manulacturos and sells a desktop computor. People Friendly has three divisions. 1. Calculate the after-tax operating income per unit eamed by each each of which is located in a difteront country. Each division is run as a profi: division under the following transfer-pricing lethods: (a) center, Information on each division follows: markat price, (b) 200\% of full cost, and (c) 300% of variable (Click the icon to view the dala.) cost. (Income taxes are not included in the computabion of the cost.based transfer prices.) 2. Which transfer-pricing mothod(s) will maximize the after-tax operating income per unit of People Friendly Computer? The costs for the woek done in each division for a single desktop computer are as follows: - Chinese inome tax rate on the China division's operating income: 40% - South Korean income tax rate on the South Koroa devision's operating income: 20% - U.S. income tax rate on the U.S, division's operating income: 28% Each desktop compuler is sold to retail outhets in the United States for $3,200. Assume that the current foreign exchange rates are as follows. Rimian =Cl1CC - Chinese income tax rate on the China division's operating inoome: 40% - South Korean income tax tale on the South Korea division's operating income: 20% - U.S income tax rate on the US division's operating income: 28% Each desktop computer is cold to retail oudets in the Unied States for $3200. Assume that the current foreign exchange ratos are as follows: 8wan=$1US1,200won=$1S Both the China and the South Korea divions sell part of their producton under a private label The China divition sels the connarable memoryheyboard package used in each People Friendy dosktop conputor to a Chinose manufacturer for 3,600 yuan The South koroa divition sels the comparable deshtop computer to a South Korean distribulor for 1,560,000 won a. China division - manufactures memory devices and keyboards b. South Korea division - assembles desktop computers using locally manufactured parts, along with memory devices and keyboards from the China Division c. U.S. division-packages and distributes desktop computers Requirement 1. Calculate the after-tax operating income per unit eamed by each division under the foliowing transfer-pricing methods: (a) market price, (b) 200\%\% 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 civision under each mothod. Then complote the table for South Korea and the United States: (Convert all foreign currencies to U.S, dollars.)
