The Variable Cost of Part X Is $50 and the Full

question 147

Multiple Choice

The variable cost of Part X is $50 and the full cost of the part is $80.The part is produced in country A and transferred to a plant in country B.Country A has a 30% income tax rate.Country B has a 50% income tax rate and an import duty equal to 10% of the price of the item.Part X can be transferred at full cost or variable cost.Assume that Part X is priced at full cost.The income tax effect per unit in country B is_____.

• A)an increase in tax by $9 per unit
• B)a decrease in tax by $9 per unit
• C)an increase in tax by $15 per unit
• D)a decrease in tax by $15 per unit

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Definitions:

Possessory Lien

A legal right or interest that a lender or storage facility has in the item in possession, as security for payment of a debt or charge.

Rug Repairer

A professional specialized in fixing and restoring rugs to their original condition.

Innkeeper's Lien

A legal right allowing innkeepers to hold, or even sell, a guest's property as security for unpaid lodging bills.

Statutory Lien

A right to keep possession of property belonging to another until a debt owed by that person is discharged, created by statute.