BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

Solutions

Chapter
Section
BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
10 views

Refer to Exercise 13-48. Suppose that Kamber is considering building a new plant inside a foreign trade zone to replace its chemical manufacturing plant.

Required:

  1. 1. How much duty will be paid per year by the factory located inside the foreign trade zone?
  2. 2. How much in duty and duty-related carrying costs will be saved by relocating inside the foreign trade zone?

Kamber, Inc., owns a factory located close to, but not inside, a foreign trade zone. The plant imports volatile chemicals that are used in the manufacture of chemical reagents for laboratories. Each year, Kamber imports about $14,200,000 of chemicals subject to a 30% tariff when shipped into the United States. About 15% of the imported chemicals are lost through evaporation during the manufacturing process. In addition, Kamber has a carrying cost of 10% per year associated with the duty payment. On average, the chemicals are held in inventory for 9 months.

Required:

  1. 1. How much duty is paid annually by Kamber?
  2. 2. What is the carrying cost associated with the payment of duty?

1.

To determine

Compute the amount of duty to be paid.

Explanation

Foreign Trade Zone:

Foreign trade zone are the areas declared as FTZs that are located in a home country, however these are treated like foreign areas for the purpose of levying duties and taxes.

Computation of amount of duty:

ParticularsAmount ($)
Imports14,200,000

Adjustment of loss due to evaporation

($14,200,000×15%)<

2.

To determine

Compute savings in carrying cost and duty payable.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

In what ways is economics a science?

Principles of Microeconomics (MindTap Course List)

Describe the major types of retail stores. Give an example of each.

Foundations of Business (MindTap Course List)

Describe the role of prices in market economies.

Brief Principles of Macroeconomics (MindTap Course List)

What is a slide error?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

Give three examples of important trade-offs that you face in your life.

Principles of Macroeconomics (MindTap Course List)

MATURITY RISK PREMIUM An investor in Treasury securities expects inflation to be 2.5% in Year 1,3.2% in Year 2,...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is a bill of activities?

Cornerstones of Cost Management (Cornerstones Series)