Montevallo Manufacturing operates a division in Brazil that manufactures goods for $30 in variable costs per unit. All 20,000 units manufactured each year are transferred to the Chicago division, where they are packaged for an additional $10 per unit and sold on the market for $75 each. There is no market for the product when it is unpackaged. The fixed costs of the Brazil division are $200,000 per year, and the fixed costs of the Chicago division are $250,000 per year. The tax rate in Brazil is 20%, while in Chicago the company pays 30% in taxes. Calculate the transfer price if it is based on a. Variable cost with a 10% markup b. Full cost with a 10% markup c. Which of the prices calculated above would the company as a whole most prefer? d. Given that there is no intermediate market for the transferred product, what difficultie
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