October 2023 — Question 19
Using the formula (Previous 12 months ((duties+taxes+fees) multiplied by 10 percent) rounded up by increments of $10,000 up to $100,000 and then by increments of $100,000 with a minimum of $50,000), what is the minimum bond amount in the following scenario? A footwear importer is establishing a new continuous bond. The importer imported a total value of $9,412,039.00 during the prior 12 months. The importer's expectation is that it will have a steady increase of 10 percent in import value in each of the next five (5) years, which will result in an increase in duties and taxes and fees paid. The importer paid $1,120,032.64 in duty for the previous 12 months and $44,368.35 in taxes and fees over the same time period.
- A$50,000.00
- B$112,000.00
- C$120,000.00
- D$200,000.00✓ CBP's answer
Why this answer
The formula supplied in the stem, drawn from CBP's continuous bond sufficiency practice under the bond amount rules of 113.13, works from amounts actually paid: duties of $1,120,032.64 plus taxes and fees of $44,368.35 total $1,164,400.99, and ten percent of that is $116,440.10. Because that figure exceeds $100,000, rounding proceeds in $100,000 increments, and rounding up reaches $200,000, the keyed option D. Option C, $120,000, is the classic error of continuing to round in $10,000 increments past the $100,000 breakpoint, and option B rounds the duty figure alone; the total import value and projected growth are decoys the formula never uses. Watch for: Rounding in $10,000 increments above $100,000, or basing the bond on import value.
Original CBLE Simulator explanation — the question and key above are CBP's; this analysis is ours. Verify against the current edition before relying on it in practice.
CBP's cited authority
Answer and citations as published in CBP's official answer key for the October 2023 examination.
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