Question: Ulsa Company has manufacturing subsidiaries in Malaysia and Malta. It is considering shipping the subcomponents of Product Y to one or the other of these countries for final assembly. The final product will be sold in the country where it is assembled. Other information is as follows:
|
Malaysia |
Malta |
| Average exchange rate |
$1 = 4.30 |
ringgits |
$1 = 0.40 |
lira |
| Import duty |
8 |
% |
18 |
% |
| Income tax rate |
20 |
% |
10 |
% |
| Unit selling price of Product Y |
645 |
ringgits |
70 |
liri |
| Price of subcomponent |
215 |
ringgits |
20 |
liri |
| Final assembly costs |
200 |
ringgits |
25 |
liri |
| Number of units to be sold |
13,400 |
units |
7,100 |
units |
In both countries, the import duties are based on the value of the incoming goods in the receiving country's currency.
Instructions: a. For each country, prepare an income statement on a per-unit basis denominated in that country's currency. (Amounts to be deducted should be indicated with a minus sign. Round your answers to 2 decimal places.)