In the Deductive Value method, what is the basis for calculating the unit price?

In the Deductive Value method, what is the basis for calculating the unit price?

• A. It involves sampling at least three domestic firms and using the one that would have sold the aggregate quantity, then deducting all expenses from dock to sale, including profit margins, to determine the unit price.
• B. It uses the total cost of manufacturing, including labor and materials.
• C. It relies on the price actually paid or payable by the importer.
• D. It uses the price of the most favourable supplier.

Answer: (A)

Deductive value uses the price at which the goods (or identical or similar goods) are sold in the importing country to unrelated buyers, in the greatest aggregate quantity. To make that price reliable, you gather data from multiple domestic firms—at least three—and select the price that corresponds to the market’s aggregate quantity. From that domestic sale price, you deduct all costs and charges incurred from the dock to the sale in the importing country, including the distributor’s profit margins, to arrive at the unit value of the imported goods. In other words, you start with the domestic selling price and remove post-importation costs to isolate the value of the goods themselves. This approach reflects market pricing in the country of importation rather than production cost, actual price paid by the importer, or a single supplier’s price.