Solved

Grupe Inc Has a Division Located in Spain and Another in in the U.S

Question 66

Essay

Grupe Inc. has a division located in Spain and another in the U.S. the Spanish division produces a part needed for the product made by the U.S. division. There is substantial excess capacity in the Spanish division. The tax rate of the Spanish division is 35% and U.S. division tax rate is 30%. The part sells externally for $75 and the Spanish division's manufacturing costs are:
Grupe Inc. has a division located in Spain and another in the U.S. the Spanish division produces a part needed for the product made by the U.S. division. There is substantial excess capacity in the Spanish division. The tax rate of the Spanish division is 35% and U.S. division tax rate is 30%. The part sells externally for $75 and the Spanish division's manufacturing costs are:    Required: 1) What would be the lowest acceptable transfer price for the Spanish division? 2) What would be the highest acceptable transfer price for the U.S. division? 3) What would be the transfer price that would be the best for Grupe Inc and why?
Required:
1) What would be the lowest acceptable transfer price for the Spanish division?
2) What would be the highest acceptable transfer price for the U.S. division?
3) What would be the transfer price that would be the best for Grupe Inc and why?

Correct Answer:

verifed

Verified

(1) minimum transfer price = $32+$12+$6 ...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents