Ex factory typically refers to the price of goods being sold from the factory rather than from the seller. It means that the buyer of the goods is responsible for the cost of freight and transport from the factory.
This type of pricing is often used for bulk purchases, or when the seller and buyer are in different areas. The seller will quote the price of the goods ex factory which will include the cost of making the goods but not any additional costs associated with transportation or customs fees and/or taxes if applicable.
The buyer will then have to make all the arrangements for freight and transport and pay the additional costs to get the goods to their desired destination.
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How do you calculate ex factory?
Ex factory price is the cost of a product that is paid by a buyer to a manufacturer. It is calculated by adding up the cost of each component of the product, raw materials, labor, overhead, and profit margin of the manufacturer.
Shipping and handling expenses are not included in the ex factory price. The manufacturer will then add the shipping and handling cost to the ex factory price when a buyer purchases the product. The ex factory price is typically used by international buyers and buyers of large orders when placing orders with international manufacturers.
Who pays freight on ex-works?
The buyer typically pays the freight charges for goods shipped using the Ex-Works (EXW) incoterm. The Ex-Works agreement means that the seller needs to make the goods available at their premises, or at another named destination.
This is agreement is the minimum required and places little or no obligation on the seller to prepare the goods for transport or export. The buyer is then solely responsible for arranging, organizing and financing their own shipment.
The seller must bear no responsibility or additional costs, including cost of packing, insurance, duties or transport. This ex-works term is most beneficial to the buyer as it gives them full control of the transportation, delivery and other logistics services.
The buyer is then free to select the most appropriate and cost-effective logistics service provider to ship the goods. The buyer is also responsible for payment of all associated costs, including but not limited to, customs duties, export and import fees, shipping documents and handling charges.
What is the opposite of ex factory?
The opposite of ex factory is “Delivered Door”. This is a term used to describe an arrangement in which a product is sent directly to the customer’s business or home. With this form of delivery, the customer is responsible for picking up or arranging shipment of the goods, as well as paying all additional costs.
It is the opposite of “ex factory,” which refers to when goods are shipped from the factory to a third party (e. g. a warehouse or distribution center) before being sent to the customer.
What costs are included in EXW?
EXW, or ExWorks, is an incoterm (internationally recognized trading term) where the seller is liable for making the goods available at the seller’s premises. The buyer is responsible for covering the cost of all transportation and any other costs associated with taking ownership of the goods.
In terms of costs associated with EXW, these typically consist of a product price (i. e. the cost of goods themselves as agreed upon between buyer and seller) and the cost of packaging and loading the goods onto a vehicle at the seller’s premises.
These charges typically must be paid for in advance, and are non-refundable. Additionally, the buyer is responsible for any other costs incurred outside of the agreed upon product price and packaging/loading fee, including picking up the goods, arranging insurance, securing required documents, and paying taxes and duties prior to customs clearance.
Overall, EXW is an attractive option for buyers as it allows them to avoid certain costs associated with other incoterms. However, it carries with it the risk that all costs may not be easily identifiable, and some understanding of the trading terms and process is essential in order to protect against any unforeseen costs.
Is there any difference between works cost and factory cost?
Yes, there is a difference between works cost and factory cost. Works cost is a type of cost associated with production of goods at a factory or with services provided to customers. It is made up of direct and indirect costs associated with the production process.
Factory cost, on the other hand, is a broader term that encompasses all the costs associated with running a factory, regardless the type of products produced or services provided. It is made up of all operating costs such as labor, raw materials, maintenance, and utility bills.
These costs are incurred regardless of whether or not production is occurring, and they are usually considered as overhead costs. The purpose of factory cost is to measure the efficiency of factory operations and determine the production cost.
What is difference between industry and factory?
The terms industry and factory are often used interchangeably, but they actually have slightly different meanings and refer to distinct concepts.
Industry is defined as a particular branch of economic or commercial activity that involves the manufacturing of goods or the provision of services. Industries are typically classified according to the type of activity they undertake and the sector they operate within (such as the automotive industry and the finance sector).
Industries usually involve an entire supply chain of companies, including upstream suppliers (the companies that supply raw materials to the industry) and downstream customers (the companies that purchase products and services at the other end of the chain).
In contrast, a factory is a specific facility or building used to produce goods and services. It is used to facilitate specific industrial processes, such as the manufacture of components or products, and requires certain specialized machinery and equipment to be in place.
The production processes that take place in a factory can either be manual or automated, and the types of products or services that are created are typically determined by the specific industry or sector in question.
What is factory answer in one word?
Factory is a one word answer used to describe a building or group of buildings where goods or products are manufactured or assembled. It is used to refer to a business or organization that makes items or components used in the production of other items.
Factory is a term that is often used to refer to a large business or organization that produces large amounts of items or components. It is also used to refer to the process of manufacturing or assembling items.
Whats another name for a factory?
Another common word used to describe a factory is “industrial plant”. An industrial plant is a place where items are made or manufactured. It is usually a large complex of buildings and machines, and it is typically used for products such as chemicals, textiles, vehicles, and food.
Factories, like industrial plants, are also used for large-scale production and manufacturing.
Is ex factory same as ex works?
No, ex factory is not the same as ex works. Ex factory is a trading term used to describe the cost of goods when they are ready for delivery, but still at the factory. This cost typically does not include any transportation, charges for packing, or loading of goods onto the delivery truck.
On the other hand, ex works is a type of delivery in which the buyer must arrange transport from the factory and assumes risk of transport. This means that the seller is not liable for any losses or damages to the goods during transit.
Ex works also refers to the price of goods at the seller’s factory, and does not usually include any charges for shipping or insurance.
What are the disadvantages of FOB?
The disadvantages of Free On Board (FOB) as a method of international shipping include:
1. Increased expenses: FOB contracts introduce additional costs for all parties involved, as the seller is responsible for transport, insurance, and any other costs associated with shipping goods all the way to the destination port.
This can add up quickly, leading to expensive shipping and large bills for goods.
2. Loss of control: As goods are no longer under the seller’s control once they reach the port, the seller’s chances of recovering damages or losses are slim. This leaves the seller open to lost or damaged goods and with no recourse to recover any costs.
3. Additional documentation: On top of the usual paperwork associated with international shipping, FOB contracts require additional documentation, as the seller needs to provide proof that goods have been delivered and accepted at the destination port.
4. Poor service speed: As both the seller and buyer are reliant on a third-party for transport, delays are common and hard to manage. This can lead to reduced service speed and a poor customer experience.
Overall, FOB is an efficient and cost-effective way for businesses to ship internationally, but it comes with its own set of risks and limitations. Knowing the advantages and shortcomings of this shipping method is essential for any business looking to use it.
Why is FOB the Incoterm?
FOB (Free On Board or Freight On Board) is an Incoterm (International Commercial Terms) used during international trade when goods are being transported. It is used to indicate the point in which title and risk of loss (legal ownership) of the goods transfers from the seller to the buyer.
In other words, it indicates when the seller is no longer legally responsible for the goods.
This point is important to determine when the seller has fulfilled their obligations within the contract. The seller must ensure the goods are safely delivered to the designated port of shipment and are free of any visible damage before the title transfers to the buyer.
The seller may also be responsible for loading the goods onto the vessel which adds an additional cost.
FOB is typically used when the buyer is purchasing the goods for export as it does not include the cost of shipment or insurance. The cost liable to the buyer is typically limited to the cost of transport from the seller’s warehouse to the shipping port.
This can make FOB particularly attractive to buyers located near the port of shipment and must be taken into account when selecting Incoterm terms.
Overall, FOB is a popular Incoterm used in international trade due to its flexibility and its ability to separate logistics and shipping costs in a convenient and cost-effective manner. This can help promote successful transactions between international buyers and sellers.
Why do some buyers prefer FOB terms?
Some buyers prefer FOB terms because they provide more control and flexibility over the delivery process. This helps ensure the goods are delivered in a timely and organized manner. With FOB terms, the buyer is responsible for arranging the shipment and is sometimes able to negotiate lower shipping costs by picking their own carrier and routes.
The buyer is also responsible for any insurance, and this can sometimes be cheaper than if the seller had taken charge. In addition, FOB terms provide buyers with increased visibility into the entire delivery process, enabling them to precisely track their goods while in transit.
This clarity is particularly beneficial if the goods need to be delivered on time and in perfect condition. Furthermore, with FOB terms, the buyer is not held responsible for any additional costs, such as duties or taxes, as long as the freight is delivered as agreed.
Lastly, FOB terms help ensure that the seller does not delay in fulfilling the delivery.
