Question
Sharpex (Hong Kong) exports 1,000 containers of razor blades to its U.S. based parent company, Eversharp. Hong Kong tax rates are 15% and the U.S.
Sharpex (Hong Kong) exports 1,000 containers of razor blades to its U.S. based parent company, Eversharp. Hong Kong tax rates are 15% and the U.S. tax rates are 35%. With the desired markup of 22% for the Hong Kong division and 10% for the U.S. parent, what is the consolidated after-tax profit?
| Construction Price Per Container | Sharpex (Hong Kong) | Eversharp (U.S.) |
| Direct costs | USD 10,000 | |
| Overhead costs | USD 6,000 | USD 1,000 |
| Total costs | USD 16,000 | |
| Desired markup (22% HK, 10% US) | ||
| Transfer price (Sales price) |
| USD 3,980,200 | ||
| USD 4,325,800 | ||
| USD 3,793,200 | ||
| USD 4,075,750 | ||
| USD 2,813,700 |
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Auditing and Assurance Services A Systematic Approach
Authors: William Messier, Steven Glover, Douglas Prawitt
9th edition
1308361491, 77862333, 978-1259248290, 9780077862336, 1259162346, 978-1259162343
