Company Centennial has two divisions. The forcasted details of operations is shown below for the upcoming...

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Company Centennial has two divisions. The forcasted details of operations is shown below for the upcoming month. Division A Division B Location Tax rates Variable costs per unit Transfer price (internal) Selling price Fixed costs Units transferred internally (no ending inventory for both divisions) Canada Ireland 45% 100 25% 80 ? 280 100,000 3,000 50,000 Required: a) What transfer price should be sset for the company to minimize its total income taxes? Show your calculations and explain the reason. b) If the company desires to minimize its total income taxes, calculate the amount of tax liability in each division. 2 marks 6 marks c) What impacts on the behaviours or attitudes might occur within divisions if the company adopts this transfer price. 2 marks Total 10 marks Company Centennial has two divisions. The forcasted details of operations is shown below for the upcoming month. Division A Division B Location Tax rates Variable costs per unit Transfer price (internal) Selling price Fixed costs Units transferred internally (no ending inventory for both divisions) Canada Ireland 45% 100 25% 80 ? 280 100,000 3,000 50,000 Required: a) What transfer price should be sset for the company to minimize its total income taxes? Show your calculations and explain the reason. b) If the company desires to minimize its total income taxes, calculate the amount of tax liability in each division. 2 marks 6 marks c) What impacts on the behaviours or attitudes might occur within divisions if the company adopts this transfer price. 2 marks Total 10 marks

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