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Unformatted text preview: 22-18 (Cont'd.) User Friendly will maximize its net income by using the 200% of full costs, transferpricing method. This is because the 200% of full cost method sources most income in the countries with the lower income tax rates. 22-18 Excel Application
User Friendly Computer, Inc. Original Data U.S. $ per yuan U.S. $ per won 0.125 0.00083 China Division Price per memory/keyboard package Variable costs Fixed costs Income tax rate 3,600 1,000 1,800 40% yuan yuan yuan South Korea Division Price per computer Variable costs Fixed costs Income tax rate 1,560,000 360,000 480,000 20% won won won U.S. Division Price per computer Variable costs Fixed costs Income tax rate $3,200 $100 $200 30% ...
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