The Variable Cost of Part X Is $50 and the Full

Multiple Choice

The variable cost of Part X is $50 and the full cost of the part is $80.The part is produced in Country Z and transferred to a plant in Country B.Country Z has a 30% income tax rate.Country B has a 50% income tax rate and an import duty equal to 10% of the price of the item.Part X can be transferred at full cost or variable cost.Assume that Part X is priced at full cost.The income tax effect per unit in country Z is_____.

A) an increase in tax by $9 per unit
B) a decrease in tax by $9 per unit
C) an increase in tax by $24 per unit
D) a decrease in tax by $24 per unit