Question

Scenario 19.4

Anthony has purchased a new shipment of 50 Bluetooth earbuds that he plans to sell for $99.99 each. The manufacturer informs Anthony that each product will cost Anthony $52, but this does not include the cost of transportation. Even with the extra transportation costs, Anthony is not worried. He believes he can sell all 50 earbuds by the end of the month. After adding up inventory, transportation, storage, and other costs, he determines that his total costs will be $3,750.

Refer to Scenario 19.4. The $52 quote Anthony got was the ____________ price.

a. zone price

b. F.O.B. factory

c. F.O.B. destination

d. freight absorption price

e. base-point price

Answer 1

Base point pricing whats the cost of transportation and freight absorption pricing in valves the liability of transportation towards the seller and zone pricing involves following a particular geographical region and setting the price accordingly. FOB destination involves the seller taking responsibility of the transportation cost while FOB factory is buyer taking the transportation cost and in this regard since Anthony is taking the responsibility of transportation cost it will be FOB factory

Therefore (b) is the answer to this question