CD Globes transferred 11,000 units of product N from its manufacturing division in Canada to its selling division in the UK during the year just ended. The manufacturing cost of each unit of product N was $120 (75% of which was variable cost). The market price for each unit of product N in Canada was $300. The Canada division's profit after tax for its sales to the UK division for the year ended was $1,100,000. The UK division incurred marketing and distribution costs of £40 for each unit of product N and sold the product for £250 a unit. The UK tax rate was 25%. (Exchange rate: £1 = $1.50) If the transfers had been made at variable cost, the UK division's profit after tax would have been: A £950,000 B £987,500 £1,050,000 D £1,237,500

CD Globes transferred 11,000 units of product N from its manufacturing division in Canada to its selling division in the UK during the year just ended. The manufacturing cost of each unit of product N was $120 (75% of which was variable cost). The market price for each unit of product N in Canada was $300. The Canada division's profit after tax for its sales to the UK division for the year ended was $1,100,000. The UK division incurred marketing and distribution costs of £40 for each unit of product N and sold the product for £250 a unit. The UK tax rate was 25%. (Exchange rate: £1 = $1.50) If the transfers had been made at variable cost, the UK division's profit after tax would have been: A £950,000 B £987,500 £1,050,000 D £1,237,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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