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Proration

Pro rata is a method of allocating amounts proportionately according to shares of a whole. It is used to determine appropriate portions of any given whole, such as allocating insurance, freight, or other charges among multiple items. The basic pro rata formula involves taking the individual item amount, divided by the total amount, and multiplying it by the amount to be allocated.

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joanna reign
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101 views

Proration

Pro rata is a method of allocating amounts proportionately according to shares of a whole. It is used to determine appropriate portions of any given whole, such as allocating insurance, freight, or other charges among multiple items. The basic pro rata formula involves taking the individual item amount, divided by the total amount, and multiplying it by the amount to be allocated.

Uploaded by

joanna reign
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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WHAT IS 'PRO-RATA’

PRORATION PRO RATA IS THE TERM USED TO DESCRIBE A PROPORTIONATE


ALLOCATION.
SINGLE ITEM
IT IS A METHOD OF ASSIGNING AN AMOUNT TO A FRACTION
MULTIPLE ITEMS ACCORDING TO ITS SHARE OF THE WHOLE.

WHILE A PRO RATA CALCULATION CAN BE USED TO DETERMINE THE


MARK JOSEPH MORALES, LCB APPROPRIATE PORTIONS OF ANY GIVEN WHOLE.

NOTE:
COMMON ITEMS TO BE FIX RATES AND ABSOLUTE VALUES SHOULD NOT APPLY
PRO-RATED: PRINCIPLE OF PRO-RATION.

➢CUSTOMS DOCUMENTARY STAMP


•INSURANCE P 280.00/FORMAL ENTRY
P 30.00/INFORMAL ENTRY
•FREIGHT
•OTHER CHARGES ➢IMPORT PROCESSING FEE
(PER CAO 2-2001)
APPLICABILITY OF PRO-RATA: PRO-RATA SIMPLIFIED:
BASIC FORMULA:
THIS APPLIES TO DIFFERENT ITEMS WITH THE SAME RATE OF
DUTY.
IND. TOS
IND. ITEM X ITEM TO BE PRO-RATED
EXEMPTION: TOTAL TOS
WHEN DIFFERENT ITEMS IN A SINGLE ADMINISTRATIVE
EQUATION:
DOCUMENT HAS DIFFERENT RATES OF DUTY THEN PRINCIPLE
IND. ITEM IND. TOS
FOR PRO-RATA IS INAPPROPRIATE TO BE USED TO DETERMINE T. ITEM
X
TOTAL TOS
ACCURATE AMOUNT.
NOTE: WHAT YOU WILL FIND SHOULD BE PLACED IN THE NUMERATOR ON
THE LEFT SIDE OF YOUR EQUATION AND ALWAYS HAVE THE SAME UNIT.

SAMPLE EQUATIONS SAMPLE EQUATIONS


Multiple Items
FRT 1 FOB 1
X
FRT T. FOB T.
FRT 2 FOB 2
X
= MEANING YOU ARE TO GET FRT 1, USING VALUES OF FOB. FRT 1+3 FOB 1+3

FRT 1 INS 1
X
FRT T. INS T.
DV 3 CPT 3
= MEANING YOU ARE TO GET FRT 1, USING VALUES OF INSURANCE. X
DV 2+3 CPT 2+3
(use when commodities have common nature)
BROKERAGE FEE: EXERCISES
GET THE BANK CHARGE OF THE ITEM TO BE PRORATED 1. A 1 x 20' container shipment consisting of various electronic appliances
discharged at the MICT have the following information:
THEN ADD TO THE PRORATED VALUE OF P 5,050.00.
FOB Value R/D
1.) LED Televisions $ 25,000.00 15%
OR 2.) Sound amplifiers $ 16,000.00 7%
Total $ 41,000.00

SOLVE FOR THE TOTAL BROKERAGE FEE THEN PRORATE. Compute for the landed cost of the televisions if dutiable value of the amplifiers
was P 820,000.00, miscellaneous expenses of the televisions was P 12,000.00 and
exchange rate utilized was P 50.00/$ 1.00.

2. A 1 x 20' container consisting of 2 different classes of dangerous 3. 1 x 20' container consisting of various apparels was discharged at
cargoes was discharged at the MICT having the following the MICT and has the following information:
information:
FOB Value R/D FOB Value R/D
Class 1 $ 15,000.00 10% 1.) Men’s t-shirts $ 5,000.00 15%
Class 2 $ 30,000.00 7% 2.) Women’s undergarments $ 6,000.00 15%
Total $ 45,000.00 Total $ 11,000.00

Compute for the total bank charge if the dutiable value for cargo Class Compute for the landed cost of the undergarments if dutiable value of
1 was P 795,000.00. the t-shirts was P 270,000.00 and miscellaneous expenses incurred for
the undergarments was P 8,000.00.
4. A 1 x 40' container shipment from the USA consisting of various 5. A 1 x 20' container consisting of toys and sports gear was
electronic devices was discharged at the MICT and has the following discharged at the MICT having the following information:
information:
FOB VALUE
FOB VALUE 1.) Toys $ 5,000.00
1.) Smart TV boxes $ 18,000.00 2.) Sports gear $ 6,000.00
2.) Video streaming dongles $ 12,000.00 Total $ 11,000.00
Total $ 30,000.00
Compute for the total bank charge if the dutiable value for the toys was
Compute for the brokerage fee, net of VAT, for the video streaming P 240,000.00.
dongles if total DV was P 1,550,000.00.

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