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Transfer Pricing - Assignment

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Added on  2021-06-14

Transfer Pricing - Assignment

   Added on 2021-06-14

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Running head: TRANSFER PRICING Transfer PricingName of the Student:Name of the University:Author’s Note:
Transfer Pricing -  Assignment_1
TRANSFER PRICING1Table of ContentsScenario 1a.......................................................................................................................................2Part 1............................................................................................................................................2Part 2............................................................................................................................................4Scenario 1b......................................................................................................................................5Part 1............................................................................................................................................5Part 2............................................................................................................................................6Part 3............................................................................................................................................6Scenario 2........................................................................................................................................6Reference.........................................................................................................................................9
Transfer Pricing -  Assignment_2
TRANSFER PRICING2Scenario 1aPart 1As per this scenario, the after tax operating profit of Derwent ltd is to be calculated whichis engaged in telecommunication equipment manufacture and has number of divisions across theworld (Rugman and Eden 2017). As per this the question which is provided in the scenario, thecalculation is done for the Australian and US division. The calculation is shown below:1) After Tax Operating Profit:a) At Full Manufacturing Cost:ParticularsAustralia DivisionUSA DivisionNos. of Units Sold1000010000Selling Price per Unit$800$1,150Total Sales Revenue$80,00,000$115,00,000Variable Cost per unit$550Fixed Manufacturing Cost per unit$250Total Manufacturing Cost/Transfer Cost per unit$800$800Total Variable Cost$55,00,000Total Fixed Cost$25,00,000Total Trasfer Cost$80,00,000US Import Duty$12,00,000Total Operating Cost$80,00,000$92,00,000Net Operating Profit$0$23,00,000Less: Income Tax$0$9,20,000After Tax Operating Profit$0$13,80,000NET PROFIT$13,80,000Figure 1: (Figure showing after tax profit operating profit for Australian and US Division)
Transfer Pricing -  Assignment_3

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