{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

# 17 - 22-24(Cont'd Austrian Division Revenues \$750 1,000...

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 22-24 (Cont'd.) Austrian Division Revenues, \$750 1,000 units` Transferred in costs, \$600 1,000 units Import duties at 10% of transferred-in price, \$60 1,000 units Division operating income Division income taxes at 44% Division after-tax operating income \$750,000 600,000 60,000 90,000 39,600 \$ 50,400 Total import duties and income taxes at transfer prices of \$500 and \$600 per unit for 1,000 units of Product 4A36 follow: Transfer Price of \$500 per Unit (Exercise 22-23, Requirement 2) (a) U.S. income taxes (b) Austrian import duties (c) Austrian income taxes \$ 0 50,000 88,000 \$138,000 Transfer Price of \$600 per Unit \$ 40,000 60,000 39,600 \$139,600 The minimum transfer price that the U.S. division manager acting autonomously would agree to results in Mornay Company paying \$1,600 in additional import duties and income taxes. A student who has done the calculations shown in Exercise 22-23, requirement 2, can calculate the additional taxes from a \$600 transfer price more directly, as follows: Every \$1 increase in the transfer price per unit over \$500 results in additional import duty and taxes of \$0.016 per unit So, a \$100 increase (\$600 \$500) per unit will result in additional import duty and taxes of \$0.016 100 = \$1.60 For 1,000 units transferred, this equals \$1.60 1,000 = \$1,600 ...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online