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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Akku Company imports die-cast parts from its German subsidiary that are
used in the production of children’s toys. Per unit, Part 169 costs the German
subsidiary $1.00 to produce and $0.20 to ship to Akku Company. Akku Com-
pany uses Part 169 to produce a toy airplane that it sells to U.S. toy stores for
$4.50 per unit. The following tax rates apply:
German income tax . . . . . . 40%
U.S. income tax . . . . . . . . . . 35%
U.S. import duty . . . . . . . . . 10% of invoice price
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Required:
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a. Determine the total amount of taxes and duties paid to the U.S. and German
governments if Part 169 is sold to Akku Company at a price of $1.50 per unit.
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b. Determine the total amount of taxes and duties paid to the U.S. and German
governments if Part 169 is sold to Akku Company at a price of $1.80 per unit.
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c. Explain why the results obtained in parts (a) and (b) differ.
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