Reference no: EM132674403

Problem 1: RED Corporation transfers merchandise inventory from its home office to its branch at an amount above cost. The average gross margin on the transfers is 40 percent. At the beginning of the year, the above branch held merchandise purchased from the home office in the amount of P35,000. During the year, the home office made three shipments of inventory to the branch at transfer prices of P30,000, P64,000 and P50,000. At the end of the year, the branch had on hand inventory purchased from the home office at an amount of P40,000. How much intracompany profit that is realized during the year?