Effect of full-cost transfer pricing method

Assignment Help Managerial Accounting
Reference no: EM13530653

Phipps manufactures circuit boards in Division A, a country with a 30% income tax rate, and transfers them to Division B, a country with a 40% income tax. An import duty of 15% of the transfer price is paid on all imported products. The import duty is not deductible in computing taxable income. The circuit boards'' full cost is $1,000 and variable cost is $700; they are sold by Division B for $1,200. The tax authorities in both countries allow firms to use either variable cost or full cost as the transfer price.

The Assignment:

Part 1: Analyze the effect of both full-cost and variable-cost transfer pricing methods on Phipps' cash flows using a spreadsheet program such as Excel.

Part 2: Make your recommendation as to how the organization should proceed, being sure to justify your recommendation with examples form this week's resources, and/or additional research. Complete this aspect of the Assignment by using a word processing program such as Word.

Reference no: EM13530653

Cost considerations-operating effectiveness

Auditors should decide, based upon cost considerations, whether to test the design effectiveness or operating effectiveness of controls. Inquiry alone provides sufficient ev

Prepare product line and total company income statements

ACC522 - Managerial Accounting - Prepare product line and total company income statements, assuming that ABC uses cost of merchandise to allocate all selling, general and ad

Factors when setting the ceos compensation

Suppose you were a member of Company X's board of directors and chairman of the company's compensation committee.- What factors should your committee consider when setting the

Received semiannual interest on the french broad bonds

Accrued 750 interest on the Buncombe Co. Bonds. Dec 31 Accrued 1400 interest on the French Broad bonds. 2015 Feb 1. Received semiannual interest on the Buncombe Co. Bonds. Mar

Calculate the variable cost per unit and fixed costs

Using the High-Low method calculate the variable cost per unit and fixed costs. If the activity in August was 200 machine hours, what would the high-low method predict the ove

Journalize the annual adjusting entries

Journalize the annual adjusting entries that were made - prepare an income statement and a retained earnings statement for the year ending December 31, 2011, and a balance s

Company offers to buy the special order units

If Mowen Company offers to buy the special order units at $65 per unit, the effect of accepting the special order on Melville's operating income next year should be a what?

Determining classifying cost

Use the following format to classify each cost as a product cost or a general, selling, and administrative (G,S,A) cost. Also indicate whether the cost would be recorded as


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd