Central Ice Machine Company is located in Omaha, Nebraska and sells Frick, Sullair, York, and Fes Fuller ammonia refrigeration parts.The company ships using FOB origin pricing.Which of the following statements about the shipment of a Frick reciprocating compressor is true?
A)All buyers will pay no shipping costs because they are paid by Central Ice Machine.
B)Central Ice Machine pays the same amount as the buyer no matter where the compressor is shipped.
C)It will cost Central Ice Machine more to ship to Charlotte, North Carolina than to Topeka, Kansas.
D)A buyer in Albany, New York, will pay significantly more shipping charges than a buyer in Lincoln, Nebraska, and Central Ice Machine will pay none.
E)All buyers will pay the same shipping costs, and Central Ice Machine will pay none.

Question

Quizplus · Accepted Answer

Under FOB origin pricing, the buyer is responsible for shipping costs from the point of origin. Therefore, a buyer in Albany, New York, will pay more than a buyer in Lincoln, Nebraska, due to the greater distance from Omaha, Nebraska. Central Ice Machine does not pay for shipping.

Central Ice Machine Company Is Located in Omaha, Nebraska and Sells