Trumble Co manufactures equipment in Ohio. Their marketing division in Sweden imports 500 units of product A12 from the US. Alternatively, they could sell those units in the US for $750 each. The following information is available.

US income tax rate on the US division’s operating income: 40%

Swedish income tax rate on the Swedish division’s operating income 45%

Swedish import duty:10%

Variable manufacturing cost per unit of A12: $450

Full manufacturing cost per unit of A12: $600

Selling price(net of marketing and distribution costs) in Sweden: $900

The Swedish import duty is charged on the price at which the product is transferred into Sweden. Any import duty paid to the Swedish authorities is a deductible expense for calculating Swedish Income taxes due.

Required: 1. Calculate the after-tax operating income earned by the US and Swedish divisions from transferring 500 units of Product A12 at full manufacturing cost per unit

Answer rating: 100% (QA)

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