Transfer pricing; international taxation crain company has a manufacturing subsidiary in singapore that produces high- end exercise equipment for u. s. consumers. the manufacturing subsidiary has total manufacturing costs of $1,500,ooo, plus general and administrative expenses of $350,000. the manufacturing unit sells the equipment for $2,500,000 to the u. s. marketing subsidiary, which sells it to the final consumer for an aggregate of the sales subsidiary has total marketing, general, and administrative costs of $200,000. assume that singapore has a corporate tax rate of 33% and that the u. s. tax rate is 46%. assume that no tax treaties or other special tax treatments apply.
required: what is the effect on crain company's total corporate-level taxes if the manufacturing subsidiary raises its price to the sales subsidiary by 20%?
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