Question: Encouraged by the results from the previous problem's analysis, corporate management of Torrington Edge wishes to continue to re-position profit in Hong Kong. It is,

Encouraged by the results from the previous problem's analysis, corporate management of Torrington Edge wishes to continue to re-position profit in Hong Kong. It is, however, facing two constraints. First , the final sales price in Great Britain must be £20,000 or less to remain competitive. Secondly, the British tax authorities - in working with Torrington Edge's cost accounting staff - has established a maximum transfer price allowed (from Hong Kong) of £17,800. What combination of markups do you recommend for Torrington Edge to institute? What is the impact of this re-positioning on consolidated profits after-tax and total tax payments?

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