When you purchase a new car, the “sticker price” includes a “destination” charge
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When you purchase a new car, the “sticker price” includes a “destination” charge. Are you purchasing the car FOB shipping point or FOB destination? Explain. |
Explanation
The FOB terms of sale must specify the point of time when the ownership of goods passes to the buyer. This point determines the bearer of the freight costs, risk, and other obligations associated with the delivery of goods.
In the FOB shipping point, the buyer will bear the freight costs from the shipping point to the destination point. The ownership is being passed on from the seller to the buyer when the goods were transferred to the transportation.
The buyer is using the FOB shipping point for purchasing the vehicle as the buyer is paying the expenses of delivery as destination charges.
Verified Answer
The purchase is considered as the FOB (freight on board) shipping point because the freight is being paid by the buyer of the vehicle.
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