The Handit Company manufactures telecommunications equipment at its plant in Ottawa, Ontario. The…

 
   

Need your ASSIGNMENT done? Use our paper writing service to score better and meet your deadlines.  

The Handit Company manufactures telecommunications equipment at its plant in Ottawa, Ontario. The company has marketing divisions throughout the world. A Handit marketing division in Vienna, Austria, imports 1,000 units of Product 4A36 from Canada. The following information is available: Canadian income tax rate on the Canadian division s operating income …………. 40% Austrian income tax rate on the Austrian division s operating income …………… 44% Austrian import duty ……………………………………………………………… 10% Variable manufacturing cost per unit of Product 4A36………………………….$350 Full manufacturing cost per unit of Product 4A36………………………………$500 Selling price (net of marketing and distribution costs) in Austria……………….$750 Suppose the Canadian and Austrian tax authorities only allow transfer prices that are between the full manufacturing cost per unit of $500 and a market price of $650, based on comparable imports into Austria. The Austrian import duty is charged on the price at which the product is transferred into Austria. Any import duty paid to the Austrian authorities is a deductible expense for calculating Austrian income taxes due. Required 1. Calculate the after-tax operating income earned by the Canadian and Austrian divisions from transferring 1,000 units of Product 4A36 (a) at full manufacturing cost per unit and (b) at market price of comparable im