Reference no: EM132832939

The following information has been provided to you by Penrith Limited which operates a manufacturing facility in Australia:

1. The entity sells its products to its affiliate in Chile.
2. The entity incurs manufacturing costs of $110 per unit which are based on operations at full capacity of 20,000 units.
3. Operating expenses are $15 per unit in both countries.
4. Costs to transport the goods to the affiliate in Chile are $30 per unit and is paid by Penrith Limited in Australia.
5. The corporate tax rate in Australia is 25%, and in Chile the corporate tax rate is 30%.
6. Chile imposes a duty of 10% on imported goods.
7. The affiliate in Chile sells each unit for $300.
8. Import duties are deductible for income tax purposes in Chile.

Required:

Problem 1: Based on the above information calculate the net profit after tax (PER UNIT) when the transfer price is based on total cost plus mark-up of 30 percent assuming all units produced are purchased solely by the affiliate in Chile.