Exercise $15-31($Algo$)$ International Transfer Prices: Ethical Issues $($LO $15-4)$

Whitehill Chemicals has two operating divisions. Its Formulation Division in the United States mixes, processes, and tests basic

chemicals, and then ships them to Ireland, where the company's Commercial Division uses the chemicals to produce and sell

various products. Operating expenses amount to $$27\mathrm{.}7$ million in the U$.$S$.$ and $$79\mathrm{.}7$ million in Ireland exclusive of the costs of any

goods transferred from the U$.$S$.$ Revenues in Ireland are $$212$ million.

If the chemicals were purchased from one of the company's Irish mixing divisions, the costs would be $$40\mathrm{.}7$ million. However, if it

had been purchased from an independent U$.$S$.$ supplier, the cost would be $$53\mathrm{.}7$ million. The marginal income tax rate is $20$

percent in the U$.$S$.$ and $12$ percent in Ireland.

Required:

What is the company's total tax liability to both jurisdictions for each of the two alternative transfer pricing scenarios $($ $$40\mathrm{.}7$ million

and $$53\mathrm{.}7$ million$)?$

Note: Enter your answers in dollars and not in millions of dollars.

Answer is complete but not entirely correct.