CES CES Export Pricing & Incoterms

Question 1

Which costing method adds all direct costs plus a fixed percentage markup to arrive at an export selling price?

Accepted Answer

Cost-plus pricing

Answer

Cost-plus pricing calculates total production and export costs, then adds a predetermined profit margin to set the export price.

Question 2

What is 'price escalation' in export pricing?

Accepted Answer

The increase in the final foreign market price caused by adding export costs (freight, duties, margins)

Answer

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.

Question 3

What is a 'transfer price' in the context of US multinational export transactions?

Accepted Answer

The price charged between related entities (e.g., parent and subsidiary) for goods or services

Answer

Transfer pricing refers to the prices set on transactions between affiliated companies, which can affect taxable income allocation across countries.

Question 4

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?

Accepted Answer

The buyer

Answer

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.

Question 5

Which pricing strategy sets a low initial export price to quickly gain market share in a new foreign market?

Accepted Answer

Penetration pricing

Answer

Penetration pricing uses a low introductory price to attract buyers and build market share rapidly before gradually raising prices.

(CES) Certified Export Specialist Practice Test

(CES) Certified Export Specialist Practice Test

CES CES Export Pricing & Incoterms