Ulsa company has manufacturing subsidiaries in malaysia and, Ask an Expert

Accounting

Ulsa Company has manufacturing subsidiaries in Malaysia and Malta. It is considering shipping the subcomponents of Product Y to one or the other of these countries for final assembly. The final product will be sold in the country where it is assembled. Other information is as follows:

Malaysia Malta

Average exchange rate $1 = 4.30 ringgits $1 = 0.40 lira Import duty 5% 15%

Income tax rate 20% 10%

Unit selling price of Product Y 645 ringgits 70 liri

Price of subcomponent 215 ringgits 20 liri

Final assembly costs 200 ringgits 25 liri

Number of units to be sold 12,000 units 8,000 units

In both countries, the import duties are based on the value of the incoming goods in the receiving country's currency.

Instructions

a. For each country, prepare an income statement on a per-unit basis denominated in that coun- try's currency.

b. In which country would the highest profit per unit (in dollars) be earned?

c. In which country would the highest total profit (in dollars) be earned?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91893329

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