1. Suppose Warrior Industries, located in the U.S sell 10,000 laser tips monthly to Blastronics, its UK subsidiary, at the unit price of $15. The U.S tax rate is 45% and the UK tax rate is 50%. In addition, Blastronics must be an ad valorem tariff of 12% on its import. IF the transfer price on tips can be set anywhere between $11 and $18, what will be the change in total taxes paid by both Warrior and Blasttronics by switching to the optimal transfer price?
A. $300 increase in taxes B. $300 reduction in taxes C. a $400 increase in taxes D. A $400 reduction in taxes
2. Warrior A US based company exports to the United Kingdom and invoices it customers in pound. after a depreciation of the dollar warrior does not change the pound price on its invoice.
A. The Equivalent dollar price of the warriors product has increased.
B. The Equivalent dollar price of the warriors product has Decreased.
C. The Equivalent dollar price of the warriors product has been unchanged.
D. Cant tell