Global Giant, a Multinational Corporation, Has a Producing Subsidiary in a Low

question 54

Multiple Choice

Global Giant, a multinational corporation, has a producing subsidiary in a low tax rate country and a marketing subsidiary in a high tax country.If Global Giant wants to minimize its worldwide tax liability, we would expect Global Giant to

• A)stop producing in the low tax rate country.
• B)stop marketing in the high tax rate country.
• C)establish a low transfer price when the producing unit sells to the marketing unit.
• D)establish a high transfer price when the producing unit sells to the marketing unit.
• E)be indifferent as to its transfer pricing policy.

---

Definitions:

Fringe Benefits

Additional compensations given to employees beyond their regular salary or wages, such as health insurance, retirement plans, or company cars.

Factory Labor

The workforce involved in the manufacturing process, whose wages are considered direct costs to the production of goods.

Job Order Cost System

An accounting system that accumulates costs by individual jobs, used in industries where goods are produced to customer specifications.

Personal Computers

Electronic devices designed for individual use, typically offering a range of applications and internet access.