Question: Consider a situation in which a manufacturing affiliate is selling to a distribution affiliate. The relevant tax information, operating expenses, and cost of goods sold

Consider a situation in which a manufacturing affiliate is selling to a distribution affiliate. The relevant tax information, operating expenses, and cost of goods sold are given in the following table. Fill out the entries in the table and determine how the overall income of the consolidated company would change if it were to increase the transfer price by$500:

ManufacturingDistribution Consolidated Affiliate (35%tax rate) S4,500 2.600 1,000 Affiliate (55%tax rate) S5,700 Companv Sales Less Less operating expenses Taxable income Less income taxes Net income cost of goods sold 450

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