Determine the total amount of net income

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Question - Adams Company imports wooden parts from its Canadian subsidiary that are used in the production of children's toys. Per unit, part AA11 costs the Canadian subsidiary $2.00 to produce and $0.40 to ship to Adams Company. Adams Company uses part AA11 to produce a toy buzzle that it sells to U.S. toy stores for $8.50 per unit. The following tax rates apply: Canadian income tax 33% U.S. income tax 35% U.S. import duty 10% of invoice price.

Required - If part AA11 is sold to Adams Company at a price of $3.50 per unit, determine the total amount of: a) Net income. b) Taxes and duties paid to the U.S. and Canadian governments.

Reference no: EM132517330

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