Scenario 19.2 Use the following to answer the questions.The BASF Chemical Company in Germany has developed a new rubberized coating. The product has an application for cell phones and other hand-held electronic devices that gives them protection from falls and scratches. BASF plans to market the product directly to businesses that manufacture the casings for these types of products. BASF currently uses a system of salespeople headquartered in Germany, while its primary business customers are in China.
-Refer to Scenario 19.2. If BASF were to price its product in barrels from the factory, before it is loaded on the carrier, this would be an example of ____ pricing.
A)buy-back allowance
B)geographic
C)F.O.B destination
D)F.O.B. factory
E)base-point

Question

Quizplus · Accepted Answer

F.O.B. (Free on Board) factory pricing means that the buyer is responsible for the shipping costs from the factory to the final destination. This would be an appropriate pricing method for BASF to use as they plan to market their product directly to businesses that manufacture the casings for cell phones and other hand-held electronic devices, and it is likely that these manufacturers would be responsible for arranging the transportation of the product from the factory to their own facilities. Pricing the product in barrels from the factory, before it is loaded on the carrier, would make sense under an F.O.B. factory pricing system.