Strategic Tax Management SOLUTIONS Transfer Pricing

Sole Problem

Scenario 1

Manufacturing Distribution
Sales 90,000,000 120,000,000
Cost of Sales (37,500,000) (90,000,000)
Gross Income 52,500,000 30,000,000
Operating Expenses (18,000,000) (15,000,000)
Net Profit 34,500,000 15,000,000

Scenario 2

Manufacturing Distribution
Sales 82,500,000 120,000,000
Cost of Sales (37,500,000) (82,500,000)
Gross Income 45,000,000 37,500,000
Operating Expenses (18,000,000) (15,000,000)
Net Profit 27,000,000 22,500,000

Scenario 3

Manufacturing Distribution
Sales 78,000,000 120,000,000
Cost of Sales (37,500,000) (78,000,000)
Gross Income 40,500,000 42,000,000
Operating Expenses (18,000,000) (15,000,000)
Net Profit 22,500,000 27,000,000

Scenario 4

Manufacturing Distribution
Sales 76,875,000 120,000,000
Cost of Sales (37,500,000) (76,875,000)
Gross Income 39,375,000 43,125,000
Operating Expenses (18,000,000) (15,000,000)
Net Profit 21,375,000 28,125,000

Scenario 5

Manufacturing Distribution
Sales 81,000,000 120,000,000
Cost of Sales (37,500,000) (81,000,000)
Gross Income 43,500,000 39,000,000
Operating Expenses (18,000,000) (15,000,000)
Net Profit 25,500,000 24,000,000

Total Transfer Price 81,000,000

Units Ordered 150,000
Transfer Price per Unit 540

Scenario 6

Manufacturing Distribution
Sales 66,750,000 120,000,000
Cost of Sales (37,500,000) (66,750,000)
Gross Income 29,250,000 53,250,000
Operating Expenses (18,000,000) (15,000,000)
Net Profit 11,250,000 38,250,000
Strategic Tax Management SOLUTIONS Transfer Pricing

Scenario 7

Manufacturing Distribution
Sales 75,000,000 120,000,000
Cost of Sales (37,500,000) (75,000,000)
Gross Income 37,500,000 45,000,000
Operating Expenses (18,000,000) (15,000,000)
Net Profit 19,500,000 30,000,000

Scenario 8

Manufacturing Distribution
Sales 82,500,000 120,000,000
Cost of Sales (37,500,000) (82,500,000)
Gross Income 45,000,000 37,500,000
Operating Expenses (18,000,000) (15,000,000)
Net Profit 27,000,000 22,500,000

Scenario 9

Total Manufacturing Distribution

Sales 120,000,000 88,500,000 120,000,000
Cost of Sales (37,500,000) (37,500,000) (88,500,000)
Gross Income 82,500,000 51,000,000 31,500,000
Operating Expense (33,000,000) (18,000,000) (15,000,000)
Net Profit 49,500,000 33,000,000 16,500,000

Total Transfer Price 88,500,000

Units Ordered 150,000
Transfer Price per Unit 590

Scenario 10

Total Manufacturing Distribution

Stage 1:
Manufacturing Company 13,125,000 13,125,000
Distribution Company 30,000,000 30,000,000
Stage 2: 75-25 6,375,000 4,781,250 1,593,750
Total 49,500,000 17,906,250 31,593,750

Total Manufacturing Distribution

Sales 120,000,000 73,406,250 120,000,000
Cost of Sales (37,500,000) (37,500,000) (73,406,250)
Gross Income 82,500,000 35,906,250 46,593,750
Operating Expense (33,000,000) (18,000,000) (15,000,000)
Net Profit 49,500,000 17,906,250 31,593,750