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Graphic Art, Inc.
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Transfer Pricing Methods
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Full Cost
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Variable Cost
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Print Division (China):
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Transfer Price
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1,500
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1,000
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Less: Cost
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(1,500)
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(1,500)
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Taxable Income
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-
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(500)
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Income Taxes (or refund)
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20%
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0
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(100)
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Retail Division (Greece):
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Sales Price
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2,000
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2,000
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Less: Transfer Price
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(1,500)
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(1,000)
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Taxable Income
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500
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1,000
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Income Taxes
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50%
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250
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500
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Import Duty
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10%
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150
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100
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Taxes in Retail Division
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400
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600
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Total Taxes
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400
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500
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China Tax Rate
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20%
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Greece Tax Rate
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50%
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Import Duty
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10%
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Full Cost
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1,500
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Variable Cost
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1,000
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Sales Price
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2,000
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