Full-cost transfer pricing method - 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………….

Read More

Click here for more paper

 
6
Kudos
 
6
Kudos

Now read this

Net income versus changes in cash

In 2010, Puckett Inc. billed its customers $60,000 for services performed. The company collected $42,000 of the amount billed. Puckett incurred $38,000 of other operating expenses on account. Puckett paid $30,000 of the accounts payable.... Continue →