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Company EJ plans to build a new plant to manufacture bicycles. EJ sells its bicycles in the world market for $400 per bike. It could locate the plant in Province P, which levies a 20% tax on business income. On the basis of the cost of materials and labor in providence P, EJ estimates that its manufacturing cost per bike would be $212. Alternatively, EJ could locate the plant in province W, which levies a 16% tax on business income. On the basis of the cost of materials and labor in province W, EJ estimates that its manufacturing cost per bike would be $230.
In which province should company EJ build its new plant?

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Accounting Basics, Accounting

Category:- Accounting Basics
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