2. Consider each of the following cases independently. Determine the best transfer pricing method and the appropriate tr

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2 Consider Each Of The Following Cases Independently Determine The Best Transfer Pricing Method And The Appropriate Tr 1 (97.2 KiB) Viewed 35 times

2. Consider each of the following cases independently. Determine the best transfer pricing method and the appropriate transfer price in each case. Explain briefly. (10 marks) 1) The headquarter in the U.S. imports one product from the branch in Country Y. The headquarter pays U.S. import duty of 20 percent on its purchase. According to the industry practice, similar product in the U.S. has a retail price of $333 which includes a 50 percent markup. 2) One electronic product manufactured by the branch in country X is very popular in Country Z. The production cost is $120 per unit. In past, the product was sold to Retailer Company (an unaffiliated company) in Country Z at the price of $180 per unit. Assume BPC would set up a subsidiary in Country Z to take charge of the sales of the product. 3) The headquarter in the U.S. sells one of its product to the branch in Country X. The production cost is 150 per unit. And transportation cost is 10% of the production cost. Other U.S. manufacturers of similar product sell to customers in Country X at a 40% markup on total cost.