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 Poland. 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 (100) and a full cost of 180 Euros (180). The Canadian division can purchase a similar potato product grown on Prince Edward Island (PEI) in Canada for $450 per tonne, but Perogy King does not prefer these PEl 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: Submit your written answers from the multi-choice questions here for Perogy King. If you prefer, you can submit Income Statements in proper form showing all of the required calculations. The correctly written multi-choice responses are worth a total of 16 marks. Required: What is the total Net Income that Perogy King Ltd. would earn from its entire operations using 200% of the Variable Costs? (3 marks - 1 mark for correct multi-choice answer and 2 marks for correctly showing your calculations in Perogy King written question space provided). $10,896,000 $8,316,000 None of the other answers $8,624,000 $10,176.000 $0 $9.396,000 For Perogy King, assume the minimum transfer price allowed by the Canadian tax authorities is 200% of the variable cost. Required: What is the total minimum transfer price allowed in Canadian dollars? (3 marks 1 mark for correct multi-choice answer and 2 marks for correctly showing your calculations in Perogy King written question space provided) None of the other answers $27,000,000 $0 $12,000,000 $35,000,000 $18,000,000 Required: 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? (3 marks - 1 mark for correct multi-choice answer and 2 marks for correctly showing your calculations in Perogy King written question space provided). $1,904,000 $0 $2,686,000 $1,404,000 $2,484,000 $2,624,000 None of the other answers 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. Required: What is the Net Income for the Polish Division of Perogy King Ltd. using the market value transfer price? Show the Income Statement in proper form in the space provided for marks. (6 marks - 1 mark for correct multi-choice answer and 5 marks for correctly showing your Income Statement in the Perogy King space provided). $8,624,000 None of the other answers $8,100,000 $9,396,000 $10,896,000 $0 $10,176,000 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. Required: What is the Net Income for the Canadian Division of Perogy King Ltd. using the market value transfer price? Show the Income Statement in proper form in the space provided for marks. (6 marks - 1 mark for correct multi-choice answer and 5 marks for correctly showing your Income Statement in the Perogy King written space provided). $8,100,000 $10,896,000 $10,176,000 $9,396,000 None of the other answers $0 $8.624.000
