Author Question: Special economic zones are customs-privileged facilities that typically exist in countries with ... (Read 20 times)

danielfitts88 · **on:** Jun 29, 2018

Special economic zones are customs-privileged facilities that typically exist in countries with low-cost labor.

Indicate whether the statement is true or false

Question 2

Cost-based transfer pricing sets the price based on the cost incurred by the company to make the product.

Indicate whether the statement is true or false

at · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

T
Special economic zones are customs-privileged facilities that typically exist in countries with low-cost labor. Under most arrangements, products are brought into an in-bond area, manipulated, and then reexported to the country where the products originated. Maquiladoras in Mexico are an example.

Answer to Question 2

F
Cost-based transfer pricing does not set the price based on cost incurred by the company, but rather by the estimated opportunity cost of the product.