A U.S.-domiciled fashion designer contracts with an overseas factory to produce the designer’s dresses for sale in the United States. The designer purchases all the necessary materials for the dresses from various sources and countries and ships the materials to the overseas factory. The designer provides his dress designs to the factory. The designer’s invoice from the factory is for the labor costs to make the dresses. The designer acts as importer of record to enter the dresses into the United States. What should the designer add to the factory invoice price to calculate the transaction value of the dresses and why should the addition(s) be made? Select the answer which is most complete.
A. The value of the designer’s designs must be added because they are an assist to the factory.
B. Nothing must be added because the contract with the factory was simply for the labor to produce the dresses.
C. The costs of the materials provided by the designer to the factory must be added because they are an assist.
D. The cost of shipping the materials provided by the designer to the factory must be added, in addition to the costs of the materials provided by the designer to the factory, because both the materials and cost of shipping the materials are considered to be assists.
E. The designer’s profit per dress must be added.
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The Answer is: D
Citation: 19 CFR § 152.102(a)(1)(i), 19 CFR § 152.103(d)(1)
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