Alabama, Inc., which produces electronic parts in the United States, has a very strong local market for part no. A405. The variable production cost is $65, and the company can sell its entire supply domestically for $125 per A405 part. The U.S. tax rate is 30%. Alternatively, Alabama can ship the part to a division that is located in Switzerland, to be used in a product that the Swiss division will distribute throughout Europe. Information about the Swiss product and the division's operating environment follows. Selling price of final product: $425 Shipping fees to import part no. A405: $25 Labor, overhead, and additional material costs of final product: $250 Import duties levied on part no. A405(paid by the Swiss division): 10% of transfer price Swiss tax rate: 40% Based on U.S. and Swiss tax laws, the company has established a transfer price for part no. A405 equal to the U.S. market price. Assume that the Swiss division can obtain part no. A405 in Switzerland for $150. Required: 1. If you were the head of the Swiss division, would you be better off financially to conduct business with your U.S. division or buy part no. A405 locally? Why? Show computations. (3 marks) 2. Alabama's accounting department has figured that the company will make $49.50 for each unit transferred and used in the Swiss division's product. Rather than proceed with a transfer, would Alabama be better off to sell its goods domestically and allow the Swiss division to acquire part no. A405 in Switzerland? Show computations for both U.S. and Swiss operations to upport your answer. Alabama, Inc., which produces electronic parts in the United States, has a very strong local market for part no. A405. The variable production cost is $65, and the company can sell its entire supply domestically for $125 per A405 part. The U.S. tax rate is 30%. Alternatively, Alabama can ship the part to a division that is located in Switzerland, to be used in a product that the Swiss division will distribute throughout Europe. Information about the Swiss product and the division's operating environment follows. Selling price of final product: $425 Shipping fees to import part no. A405: $25 Labor, overhead, and additional material costs of final product: $250 Import duties levied on part no. A405(paid by the Swiss division): 10% of transfer price Swiss tax rate: 40% Based on U.S. and Swiss tax laws, the company has established a transfer price for part no. A405 equal to the U.S. market price. Assume that the Swiss division can obtain part no. A405 in Switzerland for $150. Required: 1. If you were the head of the Swiss division, would you be better off financially to conduct business with your U.S. division or buy part no. A405 locally? Why? Show computations. (3 marks) 2. Alabama's accounting department has figured that the company will make $49.50 for each unit transferred and used in the Swiss division's product. Rather than proceed with a transfer, would Alabama be better off to sell its goods domestically and allow the Swiss division to acquire part no. A405 in Switzerland? Show computations for both U.S. and Swiss operations to upport your