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05 - 22-18(35 min Multinational transfer pricing effect of...

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22-18 (35 min.) Multinational transfer pricing, effect of alternative transfer-pricing methods, global income tax minimization. 1. This is a three-country, three-division transfer-pricing problem with three alternative transfer-pricing methods. Summary data in U.S. dollars are: China Plant Variable costs: 1,000 Yuan ÷ 8 Yuan per $ = $125 per subunit Fixed costs: 1,800 Yuan ÷ 8 Yuan per $ = $225 per subunit South Korea Plant Variable costs: 360,000 Won ÷ 1,200 Won per $ = $300 per unit Fixed costs: 480,000 Won ÷ 1,200 Won per $ = $400 per unit U.S. Plant Variable costs: = $100 per unit Fixed costs: = $200 per unit Market prices for private-label sale alternatives:
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