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in tramont co for contribution why are we not deducting 7-4=3 then deducting from 20 for additional contribution. like the question chumra co ( dec 13) we did 280-160 please can you explain this
also in tramond co why are not taking 30% as additional tax but the difference as 10%
In Tramont the question says that they are paying $7 per unit to Tramont and Tramont is earning a contribution of $4 per unit.
In Yilandwe we have to calculate the contribution. It is currently $40 when the selling price is $200, so the cost is $160. If they increase the price to $280 then the contribution becomes 280 – 160 = $120.
The tax rate in Gamala is 20%, and for Tramont is 30%. There is a double tax treaty and so Tramont just pays the extra 10% of the Gamala profits. This is the normal rule as I explain in my free lectures.
are you talking about the bi lateral treaty that is given in the question because that treaty is given in yilandwe question too or is it because they have mentioned in tramont that you can offset
You did not ask about the tax in Yilandwe.
The treatment of the tax treaty is the normal tax rule – it is always done like that.
when it is said in the question that we can offset the taxes then only take the difference?
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