ACCT 4625-ALPHA OMEGA Location Brazil Chile Sales Price
MODULE CASE 8COMPLETE THIS CASE AND SUBMIT YOUR ANALYSIS INTO THE DROPBOX BEFORE THE DUE DATE. Giant Company has two subsidiaries Alpha and Omega. Both companies make identicalcomputer printers Information about the two subsidiaries for 2009 is as follows:ALPHA OMEGA Location Brazil Chile Sales Price (US dollars) $1000 $1000 Production cost per unit $700 $650 Production capacity 20000units 30000 units Current production/sales 10000 units 20000 units Tax rate 40% 40% Part 1: determine the after tax profit of Alpha and Omega. How do you evaluate Alpha andOmega (cost, profit, or revenue center)Giant Company has $40,000 in bonuses to distribute to the 2 divisions, how do you allocate thebonuses (note: you must distribute the entire $40,000) In 2010 Giant purchases a third company called Gamma. Gamma is located in Costa Rica andsells computer printers which it acquires from other manufacturers. Information about Gammais as follows:Sales price ($) $1000 Purchase price of printers 0 Sales 9000 printersTaxes 40%To spur exports, Brazil has passed a tax change such that sales from Brazilian companies toforeigners is only taxed at 10%. Giant is convinced that the Costa Rican government will notobject to a sales price to Gamma of up to $950.In 2010 Alpha and Omega will continue to have the same sales to their local customersREQUIRED: FOR 2010A) HOW DO YOU SUPPLY GAMMA WITH PRINTERS?B) WHAT TRANSFER PRICE TO YOU CHARGE?C) HOW DO YOU EVALUATE ALPHA, GAMMA AND OMEGA (COST, REVENUE OR PROFITCENTER)D) YOU NOW HAVE $60,000 IN BONUSES TO DISTRIBUTE TO THE 3 COMPANIES, HOW DOYOU DO IT?It is now 2013 and the Brazilian tax break has expired so that all transactions involving Brazil aretaxed at 40%. In 2013 the cost of making a printer in Brazil is now $690 while the cost ofmaking a printer in Chile is $660. Alpha and Omega are still selling to their local customers at$1000 per printer.REQUIRED: FOR 2013A) HOW DO YOU SUPPLY GAMMA WITH PRINTERS?B) WHAT TRANSFER PRICE TO YOU CHARGE?C) HOW DO YOU EVALUATE ALPHA, GAMMA AND OMEGA (COST, REVENUE OR PROFITCENTER)D) YOU NOW HAVE $60,000 IN BONUSES TO DISTRIBUTE TO THE 3 COMPANIES, HOW DOYOU DO IT?
