Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The XYZ Multinational Corporation has manufacturing facilities in country A and an assembly plant in country B. The company ships manufactured units from its plant

The XYZ Multinational Corporation has manufacturing facilities in country A and an assembly plant in country B. The company ships manufactured units from its plant in A to its assembly plant in B.

  1. In April 2013, the company ships 1,000 units with a production cost of 65 per unit to its plant in country B. Its operating expenses in A are 15,000 for the month. The income tax rate in A is 20 percent and in B 40 percent. The company plans to have a transfer price of 100 per unit. The final product can be sold in B for 140. B's operating expenses are 10,000 during the month. How much will the combined profits be of the two operation in April 2.13?
  2. Could the company benefit by changing the transfer price to 120?
  3. Now, suppose the income tax rate in A is 40 percent, while in B it is 20 percent. What will be combined profit be if all other numbers are the same as in a?
  4. What would be the result in c if the company decreased its transfer price to 90?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Project Management A Managerial Approach

Authors: Jack R. Meredith, Samuel J. Mantel,

7th Edition

470226218, 978-0470226216

More Books

Students also viewed these General Management questions