Howell Company has a division in the United States that produces computerized thermostats for heating units. These thermostats are transferred to a division in Lux- embourg. The thermostats can be (and are) sold externally in the United States for $30 each. It costs $2.35 per thermostat for shipping and $2.70 per thermostat for import duties. When the thermostats are sold externally, Howell spends $3 per ther- mostat for commissions and an average of $1 per thermostat for advertising. Required 1. Which Section 482 method should be used to calculate the allowable transfer price? 2. Using the appropriate Section 482 method, calculate the transfer price.
Howell Company has a division in the United States that produces computerized thermostats for heating units. These thermostats are transferred to a division in Lux- embourg. The thermostats can be (and are) sold externally in the United States for $30 each. It costs $2.35 per thermostat for shipping and $2.70 per thermostat for import duties. When the thermostats are sold externally, Howell spends $3 per ther- mostat for commissions and an average of $1 per thermostat for advertising. Required 1. Which Section 482 method should be used to calculate the allowable transfer price? 2. Using the appropriate Section 482 method, calculate the transfer 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 15E: Mossfort, Inc., has a division in Canada that makes long-lasting exterior wood stain. Mossfort has...
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Howell Company has a division in the United States that produces computerized thermostats for heating units. These thermostats are transferred to a division in Lux- embourg. The thermostats can be (and are) sold externally in the United States for
$30 each. It costs $2.35 per thermostat for shipping and $2.70 per thermostat for import duties. When the thermostats are sold externally, Howell spends $3 per ther- mostat for commissions and an average of $1 per thermostat for advertising.
Required
1. Which Section 482 method should be used to calculate the allowable transfer price?
2. Using the appropriate Section 482 method, calculate the transfer price.
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