1. The Burton Company manufactures chainsaws at its plant in Sandusky, Ohio. The company has marketing divisions throughout the world. A Burton marketing division in Lille, France, imports 200,000 chainsaws annually from the United States. The following information is available:

U.S. income tax rate on the U.S. divisions operating income	40%
French income tax rate on the French divisions operating income	45%
French import duty	20%
Variable manufacturing cost per chainsaw	$100
Full manufacturing cost per chainsaw	$175
Selling price (net of marketing and distribution costs) in France	$300

2. Required: Suppose the United States and French tax authorities only allow transfer prices that are between the full manufacturing cost per unit of $175 and a market price of $250, based on comparable imports into France. The French import duty is charged on the price at which the product is transferred into France. Any import duty paid to the French authorities is a deductible expense for calculating French income taxes. How much was the total division after tax operating income ? (based on US Division)
   1. 0
   2. 900,000
   3. 9,000,000
   4. 6,000,000
   5. 60,000,000