Ask Question, Ask an Expert


Ask Accounting Basics Expert

Smith-Jones Company,a U.S.-based corporation,owns 100 percent of Joal SA, located in Guadalajara, Mexico. Joal manufactures premium leather hand- bags at a cost of 500 Mexican pesos each. Joal sells its handbags to Smith- Jones, which sells them under Joal's brand name in its retail stores in the United States. Joal also sells handbags to an uncontrolled wholesaler in the United States. Joal invoices all sales to U.S. customers in U.S. dollars. Because the customer is not allowed to use Joal's brand name, it affixes its own label to the handbags and sells them to retailers at a markup on cost of 30 percent. Other U.S. retailers import premium leather handbags from uncontrolled suppliers in Italy, making payment in euros, and sell them to generate gross profit margins equal to 25 percent of selling price. Imported Italian leather handbags are of similar quality to those produced by Joal. Bolsa SA also pro- duces handbags in Mexico and sells them directly to Mexican retailers earning a gross profit equal to 60 percent of production cost. However, Bolsa's handbags are of lesser quality than Joal's due to the use of a less complex manufacturing process, and the two companies' handbags do not compete directly.


a. Given the facts presented, discuss the various factors that affect the reliability of (1) the comparable uncontrolled price method, (2) the resale price method, and (3) the cost-plus method.

b. Select the method from those listed in (a) that you believe is best, and describe any adjustment that might be necessary to develop a more reliable transfer price.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M946329

Have any Question? 

Related Questions in Accounting Basics

Assignmentnbsp the eatery is a restaurant in dekalb

Assignment  The Eatery is a restaurant in DeKalb, Illinois. It specializes in deluxe sandwiches in a moderate price range. Michael Raye, the manager of The Eatery, has determined that during the last two years the sales ...

Assignment- fraud in the accounting information systemfor

Assignment- Fraud in the Accounting Information System For this assignment, research the Internet or Strayer databases to locate a firm that was involved in a fraud and / or embezzlement case. Explain how the firm's acco ...

We assumed that the sample building was not occupied it

We assumed that the sample building was not occupied. It consisted purely of capital amounts. But in the real world, part of the return earned by a building owner is rent. Now assume that rent of $11,000 is paid strictly ...

Contemporary issues in accounting-topic - critical

Contemporary issues in accounting- Topic - Critical Accounting Theory Objective- Makes a clear distinction between different theories of accounting Critically evaluate contemporary external company reporting practices Le ...

Question 1 accounting equation determine the missing amount

Question 1: Accounting Equation Determine the missing amount in each of the following cases:    Assets                          Libilities              stockholders' Equity a. $200,000                     $85,000         ...

Mulberry corporation has an august 31 year-end mulberry had

Mulberry Corporation has an August 31 year-end. Mulberry had $50,000 in accumulated E & P at the beginning of its 2015 fiscal year (September 1, 2014) and during the year, it incurred a $75,000 operating loss. It also di ...

B bakery is a family owned firm with around 70 employees

B Bakery is a family owned firm with around 70 employees and sales revenue increased to more than $ 13.5 million during the past year. It has been in business for over 50 years and supplies bread and confectionary produc ...

Assignment - perform the calculations using the financial

Assignment - Perform the calculations using the financial statements from their individual companies. Part I - Complete the following: Perform at least one profitability ratio to measure the income and operating success ...

Compare all three balance sheets on the basic grounds of

Compare all three balance sheets on the basic grounds of accounts and differences. 1. HDFC 2. Infosys and 3. Tata Steel. Balance sheets -

Bull the president of a plastics company was quoted in a

• The president of a plastics company was quoted in a business journal as stating, "We haven't had a dollar of interest-paying debt in over 10 years. Not many companies can say that." As a stockholder in this company, ho ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate