The Variable Cost of Part X Is $50 Per Unit

question 32

Multiple Choice

The variable cost of Part X is $50 per unit and the full cost of the part is $80 per unit.The part is produced in Portugal and transferred to a plant in the United States.Portugal has a 10% income tax rate.The United States 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 Part X is transferred at full cost.By using full cost instead of variable cost for the transfer price,the income tax effect per unit in Portugal is ________.

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

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Definitions:

Self-Serving Bias

A cognitive bias where individuals attribute their successes to internal factors and their failures to external factors.

Negative Wording

Phrasing questions or statements in a survey or test in a way that assumes a negative outcome, which can influence responses.

Loaded Questions

Questions that contain a controversial or unjustified assumption or that compel the respondent towards a particular answer.

Response Sets

Response sets are patterns in survey or test responses that do not directly relate to the content being measured but to some aspect of the measurement process itself.