CES Export Pricing & Incoterms Flashcards
6 cards from real CES practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CES Export Pricing & Incoterms flashcards as text
Which costing method adds all direct costs plus a fixed percentage markup to arrive at an export selling price?
Answer: Cost-plus pricing
Cost-plus pricing calculates total production and export costs, then adds a predetermined profit margin to set the export price.
What is 'price escalation' in export pricing?
Answer: The increase in the final foreign market price caused by adding export costs (freight, duties, margins)
Price escalation occurs when export costs — freight, insurance, tariffs, and distributor margins — stack up and push the foreign retail price far above the domestic price.
What is a 'transfer price' in the context of US multinational export transactions?
Answer: The price charged between related entities (e.g., parent and subsidiary) for goods or services
Transfer pricing refers to the prices set on transactions between affiliated companies, which can affect taxable income allocation across countries.
Under the Incoterms 2020 rule EXW (Ex Works), who is responsible for loading the goods onto the buyer's vehicle at the seller's premises?
Answer: The buyer
Under EXW, the seller's only obligation is to make the goods available at their premises; the buyer bears all costs and risks from that point, including loading.
Which pricing strategy sets a low initial export price to quickly gain market share in a new foreign market?
Answer: Penetration pricing
Penetration pricing uses a low introductory price to attract buyers and build market share rapidly before gradually raising prices.
Which Incoterms 2020 rule is recommended for containerized ocean shipments instead of FOB?
Answer: FCA
FCA (Free Carrier) is recommended for containerized cargo because it transfers risk at the inland terminal or container yard before loading, aligning with modern logistics.