Phipps manufactures circuit boards in Division A in a country with a 30% income tax rate and transfers these circuit boards to Division B in a country with a 40% income tax. An import duty of 15% of the transfer price is paid on all imported products. The import duty is not deductible in computing taxable income. The circuit boards' full cost is $1,000 and variable cost is $700; they are sold by Division B for $1,200. The tax authorities in both countries allow firms to use either variable cost or full cost as the transfer price. Using Excel or another spreadsheet software, prepare a summary that shows a comparison of the full cost transfer pricing method and variable cost transfer pricing method. Your summary should clearly show the total taxes the company would be subject to under each method.

This is the work I've done. Is this correct?????

	Full Cost		Variable Cost
Division A Taxes:
Transfer Price	1,000		700
Less Cost	1,000		1,000
Taxable Income	-		(300)
Taxes (30%) in Division A (or refund)	-		(90)
Division B Taxes:
Sales Price	1,200		1,200
Less Transfer Price	1,000		700
Taxable Income	200		500
Income Taxes (40%)	80		200
Import Duty (15%)	150		105
Taxes in Division B (or refund)	230		305
Total Taxes	230		395