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Question 7 6 pts Osprey Co , manufactures kayaks in Jacksonville, Florida. Its variable costs per kayak is $ 3 0 0 and the full
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Osprey Co manufactures kayaks in Jacksonville, Florida. Its variable costs per kayak is $ and the full manufacturing cost is $ Osprey ships kayaks to a division in Mexico. The Mexico division sells the kayaks to resorts in Mexico at an average price of $ Osprey pays a tax on the US division's income. Mexico levies a tax on income in Mexico. Both tax authorities only allow transfer prices that are between the full manufacturing cost per unit and a market price of $ based on comparable imports into Mexico.
What transfer price should Osprey select to minimize the company's tax liability?
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Osprey Co manufactures kayaks in Jacksonville, Florida. Its variable costs per kayak is $ and the full manufacturing cost is $ Osprey ships kayaks to a division in Mexico. The Mexico division sells the kayaks to resorts in Mexico at an average price of $ Osprey pays a tax on the US division's income. Mexico levies a tax on income in Mexico. Both tax authorities only allow transfer prices that are between the full manufacturing cost per unit and a market price of $ based on comparable imports into Mexico.
What transfer price should Osprey select to minimize the company's tax liability?
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