Accounting Help

[jcansler]

Here is the problem:

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

This is what I have so far and I am completely stuck. If anyone could help that would be greatly appreciated.

Low Country Taxes					Full Cost			Variable Cost
Transfer Price					$1,000			$700
-cost
Taxable income/lost
Income taxes (30%)
High County Taxes
Sales Price					$1,200			$1,200
-Transfer price
Taxable Income
Taxes and Duties High Country Taxes
Total Taxes and Duties

 

[stapel]

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

This is what I have so far and I am completely stuck.

All you "have so far" is a copying of some of the numbers into a table. It doesn't appear that you've actually "done" anything....?

My questions for you:

1) The "problem", as currently posted, has no actual "question". There is no task given to complete, or problem to solve. What are you needing to do with the stated information and the table?

2) Is the hyphen in front of "cost" meant to indicate subtraction? If so, of what from what? How did you handle this? If not, what?

3) Is the "Low Country" meant to correspond to "Division A"? Does the "High Country" correspond to "Division B"?

4) Are you familiar at all with working with percentages? For instance, can you find fifteen percent of seven hundred dollars?

Thank you!