Unformatted text preview: 20% ($210/$1,000) of CGS and meets the safe harbor rule. 2. What is Swallow’s QPAI per unit? QPAI is $370 ($1,400 – $800 – $210 – $20). Assume instead that Swallow incurred only $170 in production costs. Required : 3. What is Swallow’s DPGR per unit? Its QPAI per unit? As 17.5% ($170/$970) is less than 20%, the safe harbor test is not met. Therefore, DPGR and QPAI are both zero and there is no DPAD. 4. How could this have been avoided? Swallow could increase its domestic production costs enough to satisfy the safe harbor test. (possibly by bringing some of the foreign-source work home) An extra $31 to make conversion costs $201 will suffice – 201/$1,000 = 20.1%....
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- Fall '08
- The Final, Swallow, safe harbor test, Solution Swallow Corporation