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Duty-Related Costs of Locating in an FTZ Aranda Company is an import-export company that relocated earlier this year in a foreign trade zone (FTZ) in a southwestern city. The company imports $760,000 of fabric from overseas for resale to clothing companies located in the United States. Aranda purchases and receives the fabric about four months before it is sold and shipped to customers; customers are billed and pay in two months. Duty is assessed at 15 percent of cost, and Aranda faces a 6 percent carrying cost. Required: 1. What is the amount of duty paid by Aranda last year (before locating in the FTZ) and for this year after relocating to the FTZ? Duty Last Year This Year 114,000 ✔ $114,000 ✔ 2. What is the amount of carrying cost associated with the duty paid by Aranda last year and for this year after relocating to the FTZ? Last Year This Year Carrying cost of duty 3,420 22,800 X 3. What is the total duty-related cost for Aranda last year and for this year after relocating to the FTZ? Last Year This Year Total duty-related cost $ 117,420 ✓ 4. What is the total savings on duty and carrving cost attributable to locating in an FTZ? Check My Work Previous Next

Duty-Related Costs of Locating in an FTZ Aranda Company is an import-export company that relocated earlier this year in a foreign trade zone (FTZ) in a southwestern city. The company imports $760,000 of fabric from overseas for resale to clothing companies located in the United States. Aranda purchases and receives the fabric about four months before it is sold and shipped to customers; customers are billed and pay in two months. Duty is assessed at 15 percent of cost, and Aranda faces a 6 percent carrying cost. Required: 1. What is the amount of duty paid by Aranda last year (before locating in the FTZ) and for this year after relocating to the FTZ? Duty Last Year This Year 114,000 ✔ $114,000 ✔ 2. What is the amount of carrying cost associated with the duty paid by Aranda last year and for this year after relocating to the FTZ? Last Year This Year Carrying cost of duty 3,420 22,800 X 3. What is the total duty-related cost for Aranda last year and for this year after relocating to the FTZ? Last Year This Year Total duty-related cost $ 117,420 ✓ 4. What is the total savings on duty and carrving cost attributable to locating in an FTZ? Check My Work Previous Next

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Duty-Related Costs of Locating in an FTZ Aranda Company is an import-export company that relocated earlier this year in a foreign trade zone (FTZ) in a southwestern city. The company imports $760,000 of fabric from overseas for resale to clothing companies located in the United States. Aranda purchases and receives the fabric about four months before it is sold and shipped to customers; customers are billed and pay in two months. Duty is assessed at 15 percent of cost, and Aranda faces a 6 percent carrying cost. Required: 1. What is the amount of duty paid by Aranda last year (before locating in the FTZ) and for this year after relocating to the FTZ? Duty Last Year This Year 114,000 ✔ $114,000 ✔ 2. What is the amount of carrying cost associated with the duty paid by Aranda last year and for this year after relocating to the FTZ? Last Year This Year Carrying cost of duty 3,420 22,800 X 3. What is the total duty-related cost for Aranda last year and for this year after relocating to the FTZ? Last Year This Year Total duty-related cost $ 117,420 ✓ 4. What is the total savings on duty and carrving cost attributable to locating in an FTZ? Check My Work Previous Next
Transcribed Image Text:Duty-Related Costs of Locating in an FTZ Aranda Company is an import-export company that relocated earlier this year in a foreign trade zone (FTZ) in a southwestern city. The company imports $760,000 of fabric from overseas for resale to clothing companies located in the United States. Aranda purchases and receives the fabric about four months before it is sold and shipped to customers; customers are billed and pay in two months. Duty is assessed at 15 percent of cost, and Aranda faces a 6 percent carrying cost. Required: 1. What is the amount of duty paid by Aranda last year (before locating in the FTZ) and for this year after relocating to the FTZ? Duty Last Year This Year 114,000 ✔ $114,000 ✔ 2. What is the amount of carrying cost associated with the duty paid by Aranda last year and for this year after relocating to the FTZ? Last Year This Year Carrying cost of duty 3,420 22,800 X 3. What is the total duty-related cost for Aranda last year and for this year after relocating to the FTZ? Last Year This Year Total duty-related cost $ 117,420 ✓ 4. What is the total savings on duty and carrving cost attributable to locating in an FTZ? Check My Work Previous Next
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