+1-415-670-9189
info@expertsmind.com
Effect of full-cost transfer pricing method
Course:- Managerial Accounting
Reference No.:- EM13530653




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Managerial Accounting

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.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Managerial Accounting) Materials
Prepare a cash flow forecast and appropriate supporting schedules for the month of July and Fixed administrative expenses include $2,000 per month of depreciation expense.
Why do you think standard costing is the most widely used costing system in the world in manufacturing firms, even though more sophisticated systems might be available? Disc
You will complete an industry analysis of a U.S. industry of your choosing. Each student must choose a different industry. The following is a suggested outline.
Describe cost-volume-profit analysis, including the explanation of the calculation and components. In what three ways can the contribution margin be useful in cost-volume-pr
Chinese manufacturer has offered a one-year contract to supply the cases at a cost of $4 per unit. If Nantucket Optics accepts the offer, it will be able to reduce variable ma
What are the company's equity multiplier, debt ratio, and ROE - what is the market-to-book ratio for Chisel Corporation? Lambda Corporation has current liabilities of $450,000
Prepare the direct material usage budget and the direct material purchases budget and prepare the direct manufacturing labour cost budget - prepare the manufacturing overhead
Delaine is a 90% shareholder in a personal service corporation (PSC). The corporation paid Delaine a salary of $353,300 during its fiscal year ending September 30, 2015.