Please calculate net income for firm F, for division 1, and for division 2.

Firm, divisions, and currencies

• Firm F consists of division 1 and division 2
• Divisional performance measured in EUR
• USD:EUR exchange rate as of January 1 and December 31, 2022 1:1.20 and 1:1.40

Division 1

• January 1, 2022 provides USD 600 (transfer price) in services to division 2.

• Variable costs, fixed costs, and tax rate USD 200, USD 300, and 0%
• Variable costs and fixed costs incurred on January 1, 2022
• Cash as of January 1, 2022 before this provision of services, variable costs, and fixed costs USD 700

Division 2

• January 1, 2022 uses USD 600 (transfer price) in services provided by division 1.
• December 31, 2022 provides EUR 3,000 in services to an unrelated third party

• Variable costs, fixed costs, and tax rate EUR 600, EUR 480, and 0%
• EUR 480 in fixed costs excludes the services provided by division 1