fb
$20 Bonus + 25% OFF
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!
Add File

Error goes here

ACC202 Management Accounting For Multinational Transfer Pricing

tag 0 Download12 Pages / 2,770 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Questions :-

1.a) Multinational transfer pricing, global tax minimisation

 
Derwent Ltd manufactures telecommunications equipment at its plant in Geelong. The company has marketing divisions throughout the world. A Derwent Ltd marketing division in Dallas, USA, imports 10 000 units of product B12 from Australia. The following information is available:
 
Australian income tax rate on the Australian division’s operating profit 35%
US income tax rate on the US division’s operating profit 40%
US import duty 15%
Variable manufacturing cost per unit of product B12 $550
Full manufacturing cost per unit of product B12 $800
Selling price (net of marketing and distribution costs) in the United States $1150
 
Suppose that the Australian and US tax authorities only allow transfer prices that are between the full manufacturing cost per unit of $800 and a market price of $950, based on comparable imports into the USA. The US import duty is charged on the price at which the product is transferred into the USA. Any import duty paid to the US authorities is a deductible expense for calculating US income taxes due.
 
Required
1.Calculate the after-tax operating profit earned by the Australian and US divisions from transferring 10 000 units of product B12: 
a) at full manufacturing cost per unit and
b) at market price of comparable imports. (Income taxes are not included in the calculation of the cost-based transfer prices.)
2.Which transfer price should Derwent Ltd select to minimise the total of company import duties and income taxes? Remember that the transfer price must be between the full manufacturing cost per unit of $800 and the market price of $950 of comparable imports into the USA. Explain your reasoning. 
 
1.b) Multinational transfer pricing, goal congruence (continuation of Scenario 1a)
 
Suppose that the Australian division could sell as many units of product B12 as it makes at $900 per unit in the US market, net of all marketing and distribution costs.
 
Required
1.From the viewpoint of Derwent Ltd as a whole, would after-tax operating profit be maximised if it sold the 10 000 units of product B12 in Australia or in the USA? Show your calculations. 
2. Suppose that division managers act autonomously to maximise their division’s after- tax operating Will the transfer price calculated in requirement 2 of Scenario 1a) result in the Australian division manager taking the actions determined to be optimal in requirement 1 of this exercise? Explain. 
3. What is the minimum transfer price that the Australian division manager would agree to? Does this transfer price result in Derwent Ltd as a whole paying more import duty and taxes than in the answer to requirement 2 of Scenario 1a)? If so, by how much?
 
2 Airline pricing
The management of Eastcoast Airways is thinking about introducing a daily return-flight from Melbourne to the Gold Coast. You are the management accountant at Eastcoast Airways and are working with the marketing manager to recommend the price for a return ticket.
 
In researching the market, you and the marketing manager:
 
1.Establish potential demand for the planned flight
2. Distinguish between business and pleasure travellers (pleasure travellers start their travel during one week, spend at least one weekend at their destination and return the following week or thereafter; business travellers usually start and complete their travel within the same work week, i.e. they do not stay over weekends)
3.Estimate the effects of two different prices on the number of seats expected to be sold and the variable cost per ticket (see table below) 
4.Estimate from the records of similar flights that the fuel costs are likely to amount to $18 500
5. Allocate a total of $150 000 to the return flight in respect of aircraft-lease costs, ground services and flight-crew salaries.
 
You present this information to the management team for discussion at the next management meeting.
 
Max Number of seats Available (Number of seats expected to besold at price charged)
Price charged Variable cost per ticket Business Pleasure
600 $65 225 (200) 110 (100)
1350 150 215 (180) 25 (20)
 
Required
Write a report to management recommending that they charge a single price or different prices to business travellers and pleasure travellers.
 
For the second option, recommend a way in which Eastcoast Airways might implement price discrimination, to ensure that business travellers and pleasure travellers each pay the price the airline seeks to charge. Support your recommendation with clear explanations and relevant calculations.
 
Download Sample Now

Earn back the money you have spent on the downloaded sample by uploading a unique assignment/study material/research material you have. After we assess the authenticity of the uploaded content, you will get 100% money back in your wallet within 7 days.

Upload
Unique Document

Document
Under Evaluation

Get Money
into Your Wallet

Total 12 pages, 1 USD Per Page

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2020). Management Accounting For Multinational Transfer Pricing. Retrieved from https://myassignmenthelp.com/free-samples/acc202-management-accounting-for-multinational-transfer-pricing.

"Management Accounting For Multinational Transfer Pricing." My Assignment Help, 2020, https://myassignmenthelp.com/free-samples/acc202-management-accounting-for-multinational-transfer-pricing.

My Assignment Help (2020) Management Accounting For Multinational Transfer Pricing [Online]. Available from: https://myassignmenthelp.com/free-samples/acc202-management-accounting-for-multinational-transfer-pricing
[Accessed 21 October 2021].

My Assignment Help. 'Management Accounting For Multinational Transfer Pricing' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/acc202-management-accounting-for-multinational-transfer-pricing> accessed 21 October 2021.

My Assignment Help. Management Accounting For Multinational Transfer Pricing [Internet]. My Assignment Help. 2020 [cited 21 October 2021]. Available from: https://myassignmenthelp.com/free-samples/acc202-management-accounting-for-multinational-transfer-pricing.


When you have deadlines to meet for your multiple tasks, it sure gets hectic. To ease this constant pressure, select the timely assignment help service in Aus from MyAssignmenthelp.com. Our experts have maintained a brilliant record for providing well-crafted assignments before the specified time. Thus, you will never have to miss a deadline when you choose our excellent writing service.

Latest Accounting Samples

ACCG923 Accounting Standards And Practice

Download : 0 | Pages : 7

Answer: Introduction The present report is prepared in order to provide an understanding of the qualitative characteristics of the financial information for making it useful for the end-users. The financial reports developed by business corporations should meet the objectives of general purpose financial reports as stated by the IASB (International Accounting Standards Board). This report aims to present an understanding of the financial repo...

Read More arrow

ACCT5942 Corporate Accounting And Regulation

Download : 0 | Pages : 5

Answer: Introduction: The excess of carrying amount of the asset over its recoverable amount can be defined as impairment loss and recoverable amount refers to the net selling price or its value in use whichever is higher. ‘Value in use’ of the asset is calculated by taking present value of the expected cash flows (including residual value) arising from the use of asset. (Sehgal, 2014)  Earlier assets were shown on the balan...

Read More arrow

ACCT 6344 Financial Statement Analysis

Download : 0 | Pages : 3

Answer: Comparative Income Statement: Comparative Income Statement:       Taejon Branch   Whole Company Traditional Method ABC Method Particulars 2007 2008 2007 2008 2007 2008 Revenues $203,500,000 $227,800,000 $23,600,000 $33,200,000 $23,600,000 $33,200,000 Total Direct Costs &n...

Read More arrow Tags: Australia Chino Accounting University of New South Wales 

ACC5502 Accounting And Financial Management

Download : 0 | Pages : 17

Answers: Part One: Introduction: Balanced score card is a system of management that is used by organization to make the communication of the objective which the organization intends to achieve along with monitoring and measuring the progress toward strategic target. It enables the organization in aligning the day-to-day work and prioritizing the services, products and projects. Balanced score card is a framework for measuring the performance...

Read More arrow

7156AFE Advanced Auditing And Assurance

Download : 0 | Pages : 3

Answers: Introduction Largest publically funded organizations health care company in Australia. Operated by Department of Human services, health care support to private and permanent Australian residents. Listed on the Australian Stock Exchange Covers around 30% of the market having around 4 million customers in aggregate. Ranked 7th in the 9 health insurance companies in terms of customer services in Australia. 1...

Read More arrow
Next

5% Cashback

On APP - grab it while it lasts!

Download app now

*Offer eligible for first 3 orders ordered through app!

ribbon
callback request mobile
Have any Query?