Wednesday, August 25, 2010

Deductive Value Quiz

It has been a slow news week in international trade, so we're going to have a little fun with Part 152 of the CFR. Read and answer the question below. You are welcome to submit answers; however, we won't publish them until Thursday night so that everyone has a chance to work the problem without being tempted to look at the answers that have been submitted. Then on Friday, we will post the answer along with an explanation. Choose wisely; it could be a trick question.

Wilson’s Watermelons, a large fresh foods distributor in Laredo, Texas, imports 400 cartons of watermelons on consignment from a farming operation in Mexico. The watermelons are shipped to Dallas for sale at the Cowboy's Fresh Fruit & Vegetables Market. Once placed for sale at the local market, all of the cartons are sold to unrelated parties within two days. Based on an examination of the merchandise, including identical or similar watermelons, the unit price sold in the greatest aggregate quantity is $15 per carton (300 cartons). The cartons of watermelons are appraised under deductive value. Wilson submits the following cost data per carton.

Commissions $1.50
Profit and General Expenses $1.50
Transportation from Mexico to Laredo $1.00
Transportation from Laredo to Dallas $0.85
Customs Duties $1.14

What is the appraised value?

A.) $9.01
B.) $13.51
C.) $15.00
D.) $10.51
E.) $11.51

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