Question 1:

Office Friendly Computer, Inc., with headquarters in San Francisco, manufactures and sells a desktop computer. Office Friendly has three divisions, each of which is located in a different country. Each division is run as a profit center. Information on each division follows: II: (Click the icon to view the data.) Requirements 1. Calculate the after-tax operating income per unit earned by each division under the following transfer-pricing methods: (a) market price, (b) 200% of full cost, and (c) 350% of variable cost. (Income taxes are not included in the computation of the cost-based transfer prices.) 2. Which transfer-pricing method(s) will maximize the after-tax operating income per unit of Office Friendlu C.nmnutar? Requirement 1. Calculate the after-tax operating income per unit earned by each division under the following transfer-pricing methods: (a) market price, (b) 200% of full cost, and (c) 350% 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 division under each method. Then complete the table for South Korea and the United States. (Convert all foreign currencies to U.S. dollars.) finition China division - manufactures memory devices and keyboards South Korea division - assembles desktop computers using locally manufactured parts, along with memory devices and keyboards from the China Division J.S. division - packages and distributes desktop computers Otfice Friendly Computer, Inc., with headquarters in San Francisco, manufactures and sells a desktop computer. Office Friendly has three divistons, each of which is located in a different country. Each division is run as a profit center. Information on each division follows: (Click the icon to view the data.) 1. Calculate the after-tax operating income per unit earned by each division under the following transfer-pricing methods: (a) market price, (b) 200% of full cost, and (c) 350% of variable cost. (Income taxes are not included in the computation of the cost-based transfer prices.) 2. Which transfer-pricing method(s) will maximize the after-tax operating income per unit of Otfice Friendly Computer? Requirement 1. Calculate the after-tax operating income per unit earned by each division under the following transfer-pricing methods: (a) market price, (b) 200% of full cost, and (c) 350% of variable cost. (income taxes are not included in the computation of the cost-based transter prices.) Begin with calculating the after-tax operating income for the China division under each method. Then complete the table for South Konea and the United States. (Convert all foreign currencies to U.S. dollars.) Method A Method B Method C Ching divisian Data table The costs for the work done in each division for a single desktop computer are as follows: China division: South Korea division: U.S. division VariablecostFixedcostVariablecostFoxedcostVariablecostFixedcost=900yuan=1,980yuan=350,000won=470,000won=$125=$325 - Chinese income tax rate on the China division's operating income: 40% - South Korean income tax rate on the South Korea division's operating income: 20% - U.S, income tax rate on the U.S, division's operating income: 30% Each desktop computer is sold to retail outlets in the United States for $3,800. Assume that the current foreign exchange rates are as follows: 9yuan=$1U.S.1,000won=$1U.S. Both the China and the South Korea divisions sell part of their production under a private label. The China division sells the comparable memory/keyboard package used in each Office Friendly desktop computer to a Chinese manufacturer for 4,500 yuan. The South Korea division sells the comparable desktop computer to a South Korean distributor for 1.340 .000 won. Office Friendly Computer, Inc., with headquarters in San Francisco, manufactures and sells a desktop computer. Office Friendly has three divisions, each of which is located in a different country. Each division is run as a profit center. Information on each division follows: Click the icon to view the data.) 1. Calculate the after-tax operating income per unit earned by each division under the following transfer-pricing methods: (a) market price, (b) 200% of full cost, and (c) 350% of variable cost. (Income taxes are not included in the computation of the cost-based transfer prices.) 2. Which transfer-pricing method(s) will maximize the after-tax operating income per unit of Office Friendly Computer? Requirement 1. Calculate the after-tax operating income per unit earned by each division under the following transfer-pricing methods: (a) market price, (b) 200% of full cost, and (c) 350% 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 division under each method. Then complete the table for South Korea and the United States. (Convert all foreign currencies to U.S. dollars.)