Full cost V cost Sheet3 Padre Inc., a U.S. company, has two subsidiaries, Hijo and Amery. Hijo is located in Brazil and Amery in the U.S. The tax rate is 17% in Brazil and 21% in the U.S. The full cost per unit is $5 for Hijo. Amery sells the units in the U.S. at $15 per unit. Ignore any other costs. Option 1: Hijo transfers 100 units of coca to Amery at a negotiated transfer price of $10 per unit. Option 2: Padre intervenes to set the transfer price at $13.per unit. Which TP produces the higher net profit? Option 1 Hijo Amery Padre Sales COGS Gross profit Income tax effect After-tax profit Option 2 Hijo Amery Padre Sales COGS Gross profit Income tax effect After-tax profit Full cost V cost Sheet3 Padre Inc., a U.S. company, has two subsidiaries, Hijo and Amery. Hijo is located in Brazil and Amery in the U.S. The tax rate is 17% in Brazil and 21% in the U.S. Amery sells the units in the U.S. at $15 per unit. Ignore any other costs. Assume, instead of full cost per unit is $5, Hijo's variable cost per unit is $5 and fixed cost per unit is $3. Amery's per unit fixed cost is $4. Do your calculation to show the new results for option 1 and option 2. Option 1: Hijo transfers 100 units of coca to Amery at a negotiated transfer price of $10 per unit. Option 2: Padre intervenes to set the transfer price at $13 per unit
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
