What is the allowable range of transfer prices?
Not what you're looking for?
Your company has 2 divisions, one in the US and one in Ireland. The division in the US is taxed at a rate of 40% and the division in Ireland is taxed at a rate of 10%. The division in Ireland produces a product with a full cost of $90/unit (translated into US dollars). This product has a market price of $120/unit (in US dollars). The product is then transferred to the US where an additional full cost of $60 is added to convert this to a final product. The final product can be sold for $240 in the US. You are trying to decide whether to use a transfer price equal to the market value or 150% of full cost. In terms of income taxe minimization, which transfer price would you prefer?
Provide calculations?
What is the allowable range of transfer prices?
Purchase this Solution
Solution Summary
The expert determines what is the allowable range of transfer prices.
Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.