Perogy King Ltd. is a publicly traded Canadian company that is listed on the Toronto Stock Exchange. All of the company's financial statements are stated in Canadian dollars. Perogy King Ltd. has a Canadian division and has a fully owned subsidiary in Polland. The Polish subsidiary produces a potato that is specially grown for perogies. A tonne of these special potatoes has a variable cost of 100 Euros and a full cost of 180 Euros. The Canadian division can purchase a similar potato product grown on Prince Edward Island (PEI) in Canada for $450 per tonne or do a special one- time discounted purchase for an American potato for Canadian $490 per tonne including shipping but Perogy King does not prefer these PEI or American potatoes because they are not as creamy as the Polish potatoes.

Every year Perogy King sells 10 million packages of perogies (each package weighs one kilogram) in the Canadian market and these retail for $3.50 per package. it takes 60,000 tonnes of potatoes to make 10 million packages of perogies. The Canadian division incurs additional processing costs of $.80 per package to make and package the perogies

One Euro is worth $1.50 Canadian. The marginal tax rate in Canada is 25% and the marginal tax rate in Poland is 13%

REQUIRED

1) What is the total income tax that Perogy King Ltd has to pay for its entire operations using the Market Value of the Raw Product ?

2) What is the total Net Income that Perogy King Ltd would earn from its entire operations using 200% of the Variable Costs ?

3)For Perogy King , assume the maximum transfer price allowed by the Canadian tax authorities is the market value of the raw product (potatoes). Also assume operating income in each country is equal to taxable income

What is the Net Income for the Polish Division of Perogy King Ltd. using the market value transfer price ? Show the income statement .

4) For Perogy King , assume the maximum transfer price allowed by the Canadian tax authorities is the market value of the raw product (potatoes). Also assume operating income in each country is equal to taxable income.

What is the Net Income for the Canadian division of Perogy King Ltd. using the market value transfer price ? Show the income statement.