Gregg Manufacturing has one plant located in Belgium and another plant located in the United States. The Belgium plant manufactures a component used in a finished product manufactured at the U.S. plant. Currently, the Belgium plant is operating at 70 percent capacity. In Belgium, the income tax rate is 30 percent; in the United States, the corporate income tax rate is 35 percent. The market price of the component is $280 and the Belgium plant's costs to manufacture the component are as follows:
What is the maximum transfer price that the U.S. division would be willing to pay?

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The Answer of Gregg Manufacturing has one plant located in Belgium and another plant located in the United States. The Belgium plant manufactures a component used in a finished product manufactured at the U.S. plant. Currently, the Belgium plant is operating at 70 percent capacity. In Belgium, the income tax rate is 30 percent; in the United States, the corporate income tax rate is 35 percent. The market price of the component is $280 and the Belgium plant's costs to manufacture the component are as follows:
What is the maximum transfer price that the U.S. division would be willing to pay?

Gregg Manufacturing Has One Plant Located in Belgium and Another