Melon Computer Company Manufacturers Its Computer Components in Singapore and Assembles

Multiple Choice

Melon Computer Company manufacturers its computer components in Singapore and assembles the computers intended for sale in North America in its plant in Arizona. If the U.S. reduces the corporate income tax rate next year, what is the likely outcome for Melon Computer Company?

A) Reduce the transfer price for computer components and increase downstream profits
B) Reduce the transfer price for computer components and decrease downstream profits
C) Increase the transfer price for computer components and increase downstream profits
D) Increase the transfer price for computer components and decrease downstream profits