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Zen Manufacturing, Incorporated, is a multinational firm with sales and manufacturing centers in 15 countries....

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Zen Manufacturing, Incorporated, is a multinational firm with sales and manufacturing centers in 15 countries. One of its manufacturing divisions, in country X, sells a product to a retail division in country Y for $344,000 per unit. The division in country X has manufacturing costs of $177,500 for this product. The retail division in country Y sells the product to final customers for $477,500 per unit. Zen is considering adjusting its transfer prices to reduce its overall corporate tax liability. Required: 1. Assume that both country X and country Y have corporate income tax rates of 40% and that no special tax treaties or benefits apply to Zen. What would be the effect on Zen's total tax burden if the manufacturing unit raises its price from $344,000 to $412,800 ? 2. What would be the effect on Zen's total taxes if the manufacturing unit raised its price from $344,000 to $412,800 and the tax rates in countries X and Y are 20% and 40%, respectively? (For all requirements, leave no cells blank; if there is no effect enter "0" and select "No effect" from dropdown.)

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