Obiba JK Enterprise imports component parts from China and assemble them into various forms of office equipment. On 1 January 2016, components parts were imported with the following details:
Cost of containers containing the goods $2,200.00
Cost of packing for labour and materials in China $550.00
Cost of materials used in China in the production incurred by Obiba JK $15,600.00
Cost of Tools inserted in the components incurred by Obiba JK $3,750.00
Cost of Engineering development and Design paid by Obiba JK $630.00
Royalties and licences paid by the Obiba JK $330.00
Cost of labour and others in China (not included above) $7,400.00
Shipping and transport cost to the Tema Habour GH¢16,200.00
Loading, unloading and handling charges up to Tema habour GH¢5,400.00
Cost of marine insurance GH¢2,958.30
Assembling overhead cost incurred at Obiba JK’s factory GH¢23,400.00
Fees for freight services by a shipping company up to Tema Harbour GH¢3,700.00
Additional information:
- The Chinese exporter allows trade discount of 2% on the cost of the goods. (yet to be accounted for)
- Excise duty paid in China is $560.00 on the goods. (this is included in the cost of labour and others)
- Contingent discounts and rebates allowed by the Chinese company is 1% of the cost of the goods, before trade discount and excise duty. (this has been accounted for in the above figures)
- Technical assistance from the Chinese company for the assembly of the goods amounted to GH¢3,000.00 after the goods have arrived at Obiba JK’s factory.
- Average exchange rate during the entry for the import was $1= GH¢3.11
- Import duty is 20%
Required:
i) Compute the Cost, Insurance and Freight, clearly showing workings of each component. (9 marks)
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ii) Compute the VAT/NHIL (1 mark)
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