Try It$!23-4$: Generation Electronics makes solar panels at its plant in Akron, Ohio. Its variable cost per panel is $$90$ and the full manufacturing cost is $$250.$ Generation ships $300,000$ panels to a division in Madrid, Spain. Net of marketing and distribution costs, the Madrid division sells the panels throughout the European Union at an average price of $$500.$

Generation pays a $25\%$ tax on the U$.$S$.$ division's income. Spain levies a $30\%$ tax rate on income in the Madrid division. Both tax authorities only permit transfer prices that are between the full manufacturing cost per unit and a market price of $$375,$ based on comparable imports into Spain.

What transfer price should Generation select to minimize the company's tax liability?

panel imports A $17\%$ customs duty is now levied on the price at which panels are transferred into the country The duty is a deductible expense for calculating Spanish income for the purposes of income tax

Calculate the after$-$tax operating income eamed by the $US.$ and Spanish divisions from transferring $300,000$ solar panels $($a$)$ at the full manufacturing cost per unit and $($b$)$ at the market price of comparable imports

In the presence of the customs duty, what transfer price should Generation select to