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

question 9

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 net tax effect is:

• A) an increase in tax by $6 per unit
• B) a decrease in tax by $15 per unit
• C) a decrease in tax by $3 per unit
• D) an increase in tax by $9 per unit

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Definitions:

Fund Accounting Approach

A system of accounting used primarily by non-profit organizations and governments, where resources are categorized into funds based on their intended purpose.

Not-For-Profit Entities

Organizations that operate for purposes other than making a profit, often focused on charitable, educational, or social goals.

Accruing Patient Charges

The process of recording the earnings and related costs of medical services at the time they are provided, not when payment is received.

Patient Service Revenues

The income earned by healthcare providers through the provision of medical services to patients.