A firm ships its products to foreign subsidiary and charges a price that may increase import duties but lower the income taxes paid by the subsidiary. The most likely reason for these effects is that the a.              Price is an arm-length’s price b.              Price is a cost-plus price

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 12DQ: If the minimum transfer price of the selling division is less than the maximum transfer price of the...
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A firm ships its products to foreign subsidiary and charges a price that may increase import duties but lower the income taxes paid by the subsidiary. The most likely reason for these effects is that the

a.              Price is an arm-length’s price

b.              Price is a cost-plus price

c.               Transfer price is too low

d.              Transfer price is too high

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