Valuation – Deductive method – Quiz 2 – Question 18

19 CFR § 152.105(c)(1) If the merchandise concerned is sold in the condition as imported at or about the date of importation of the merchandise being appraised, the price is the unit price at which the merchandise concerned is sold in the greatest aggregate quantity at or about such date.
19 CFR § 152.105(c)The price determined under paragraph (c) of this section will be reduced by an amount equal to:

(1) Any commission usually paid or agreed to be paid, or the addition usually made for profit and general expenses, …;

(2) The actual costs and associated costs of transportation and insurance incurred with respect to international shipments of the merchandise concerned from the country of exportation to the United States;

(3) The usual costs and associated costs of transportation and insurance incurred with respect to shipments of the merchandise concerned from the place of importation to the place of delivery in the United States, if those costs are not included as a general expense under paragraph (d)(1) of this section;

(4) The customs duties and other Federal taxes currently payable on the merchandise concerned by reason of its importation, and any Federal excise tax on, or measured by the value of, the merchandise for which vendors in the United States ordinarily are liable; and

(5) But only in the case of price determined under paragraph (c)(3) of this section, the value added by the processing of the merchandise after importation to the extent that the value is based on sufficient information relating to the cost of that processing.

Here, the importer sold 400 of the potato pies for $4.00 each to an unrelated U.S. firm, the remaining 200 potato pies were sold to a second unrelated firm for $3.00 each. The unit price at which the merchandise concerned is sold in the greatest aggregate quantity is $4 and so we have to take this price and make the deductions from it.
Total sale price = (400+200)4 = $2400

We are provided information on international shipping and customs duty paid, both of which are to be deducted from the sale price.
The importer paid an international shipping charge of 10 cents per potato pie. So for 600 potato pies, the importer paid total shipping charges of 10 cents x 600 pies = 6000 cents = $60
The importer paid $300 in Customs duties related to the shipment of imported potato pies.
Total deduction = $60 + $300 = $360

Total sale price – deduction = $2,400 – $360 = $2,040 which is Answer choice A.