Question : 81) Empire Company has two divisions. Division C located in Canada where : 1196201

81)

Empire Company has two divisions.

Division C is located in Canada where the income tax rate is 40%.

Division K is located in Korea where the income tax rate is 30%.

Division C produces an intermediate product at a variable cost of $100 per unit and transfer the product to Division K where it is finished and sold for $500 per unit.

Variable costs in Division K is $80 per unit.

Fixed costs are $75,000 per year in Division C and $90,000 per year in Division K.

Assume 1,000 units are transferred annually and the minimum transfer price allowed by the Canadian tax authorities is the variable cost.

Also assume operating income in each country is equal to taxable income.

Required:

What transfer price should be set for Empire to minimize its total income taxes?

Show your calculations.

If Empire desires to minimize its total income taxes, calculate the amount of tax liability in each country. 81)

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82)

Mar Company has two decentralized divisions, X and Y.

Division X has been purchasing certain component parts from Division Y at $75 per unit.

Because Division Y plans to raise the price to $100 per unit, Division X desires to purchase these parts from external suppliers for $75 per unit.

The following information is available:

Division y variable cost per unit

$70

Division Y annual fixed costs$15,000

Division Y annual production

of parts for Division X1,000 units

If Division X buys from an external supplier, the facilities Division Y uses to manufacture these parts will be idle.

Assuming Division Y’s fixed costs cannot be avoided, what is the result if Mar requires Division X to buy from Division Y at a transfer price of $100 per unit?

82)

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83)

The Brownshoe Company has three specialized divisions. The Casual Shoe Division has asked the Sole Division to supply it with a large quantity of soles. The Sole Division is currently at capacity. The Sole Division sells soles outside for $5.00 each. The Casual Shoe Division, which is operating at 50 percent capacity, has offered to pay $4.00 per sole. The Sole Division has a variable cost of $3.60 per sole. The Casual Shoe Division has the following cost structure:

Direct materials, except soles $ 60.00

Soles4.00

Conversion costs36.00

Fixed overhead

20.00

Total cost per pair of shoes$120.00

The manager of Casual Shoe believes that the $4 price from Sole is necessary if the division is to compete in the market for casual shoes.

Required:

a.As manager of Sole Division, would you recommend that your division supply the soles to Casual Shoe? Why?

b.Would it be desirable for the division to supply Casual Shoe with the soles for $4 assuming the Sole Division had excess capacity? Why?

c.What would be the corporate position assuming the Sole Division has excess capacity? 83)

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84)

Sportswear Company manufactures socks. The Athletic Division sells its socks for $6 each to outsiders. Socks have manufacturing costs of $2.50 each for variable and $1.50 for fixed. The division’s total fixed manufacturing costs are $105,000 at the normal volume of 70,000 units.

The European Division has offered to buy 15,000 socks at the full cost of $4. The Athletic Division has excess capacity and the 15,000 units can be produced without interfering with the current outside sales of 70,000. The 85,000 volume is within the division’s relevant operating range.

Explain whether the Athletic Division should accept the offer. 84)

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85)

The Home Office Company makes all types of office desks. The Computer Desk Division is currently producing 10,000 desks per year with a capacity of 15,000. The variable costs assigned to each desk are $300 and annual fixed costs of the division are $900,000. The computer desks sell for $400.

The Executive Division wants to buy 5,000 desks at $280 for its custom office design business. The Computer Desk manager refuses the order because the price is below variable cost. The Executive manager argues that the order should be accepted because it will lower the fixed cost per desk from $90 to $60 and will take the division to its capacity, thereby causing operations to be at their most efficient level.

Required:

a.Should the order from Executive Division be accepted by Computer Desk? Explain why or why not.

b.From the perspective of the Computer Desk Division and the company, should the order be accepted if the Executive Division plans on selling the chairs in the outside market for $420 after incurring additional costs of $100 per desk?

c.What action should the company president take? 85)

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July 1, 2023

Distinguishing Inductive and Deductive Reasoning

Required Resources
Read/review the following resources for this activity:

· Textbook: Chapter 8, 9, 17 (Introduction)

· Lesson

· Minimum of 1 scholarly source (in addition to the textbook)

Click on the following tabs to review the concepts that will be addressed in this activity:

A valid structure is the way in which an argument is put together that assures it will pass the test of logical strength.

Deductive: In deductive arguments, the speaker asserts that her premises are true and, therefore, her conclusion must be accepted. Remember that in a deductive argument, logical strength does not depend on the literal truth of the premises. When we test for logical strength, we assume the premises are true. Once we determine that the argument is logically valid, we can then look at the actual – not presumed – truth of the premises.

Inductive: In inductive arguments, the speaker presents evidence that she claims support the probable truth of her conclusion – that her conclusion is the most likely true – and so you should accept it.

The Basic Structure of Deductive and Inductive Arguments
Argument examples:

Deductive Argument Example: “Tightening laws restricting the use and possession of firearms does not protect average law-abiding citizens; it only puts them at greater risk. Enforcing licensing restrictions, trigger locks, and waiting periods makes it more difficult for law-abiding citizens to defend themselves, and, as a result, encourages criminal activity. Only criminals benefit when ordinary citizens are deprived of their right to own a firearm and protect themselves, their homes, and their families" (Lott, 2000, p. 169)

Lott, J., (2000). More guns, less crime: Understanding crime and gun-control laws. University of Chicago Press.

The argument boils down to this:

· Laws that are obeyed by ordinary citizens and not obeyed by criminals are laws that put ordinary citizens at risk.

· Tight gun laws are laws that are obeyed only by ordinary citizens.

· Tight gun laws put ordinary citizens at risk.

However, the argument itself is composed of three intertwined syllogisms:

Only ordinary citizens are persons who respect tight gun laws.
Criminal persons are not ordinary citizens.
Therefore, criminals do not respect tight gun laws.

Tight gun laws restrict only ordinary citizens.
No criminal is an ordinary citizen.
No criminal is restricted by tight gun laws.

Laws that disfavor the good are laws that favor the bad.
Tight gun laws favor the bad.
Therefore, tight gun laws disfavor the good.

Notice that you cannot remove any of the “legs” and maintain the claim. Notice, also, that the reasons are closely connected and depend on or follow from each other. Notice, also, that the first premise (called the major premise) must be accepted as true, or the entire argument fails.

Inductive Argument: The United States is too dependent upon foreign oil. According to the U.S. Department of Energy, we rely on imported foreign oil for about 45% of our needs. Of the imported oil, most comes from Canada, but 22% comes from countries in the Middle East. Undeniably, this dependence shapes our foreign policy. We have vast oil reserves that could make us energy independent. Development of these resources would produce much-needed jobs, many of them in areas of the country suffering most from the recession. We should be developing an energy policy that makes us energy independent.

· Reason: We import 45% of our oil.

· Reason: Middle East oil imports shape our foreign policy.

· Reason: Our vast oil reserves could make us energy independent.

· Reason: Development of oil reserves could produce much needed jobs.

· Conclusion: For any or all of the above, independent reasons, we should become energy independent.

Notice that any one of these reasons, standing alone, could support the conclusions; they are not logically related to one another as they would be in a syllogism.

Initial Post Instructions
For the initial post, address the following:

· Find and post examples of deductive and inductive arguments. Do NOT use an argument example which clearly indicates it is an example of an inductive/deductive argument.

· For each example, evaluate its logical strength, using the concepts and ideas presented in the textbook readings, the lesson, and any other source you find that helps you to evaluate the validity (deductive) or strength (inductive) of the argument. You can use examples from the text, or you can find examples elsewhere.

oEditorials and opinion columns are a good source, as are letters to the editor. Blogs will also often be based on arguments.

oUse mapping and evaluative techniques to make sure it is an argument.

· Is it inductive or deductive? Explain why.

· Does it pass the tests of validity and strength? Explain.