In early 2016, the same Germany machinery company has interest from four prospective clients from emerging markets: Indonesia, B
razil, Russia, and South Africa. They all want to buy ten machines, but the factory can only produce ten in time. Therefore, the company has to choose only one client. Given the volatility of the domestic currencies of the four prospective clients, the CFO would like to choose the client which is least likely to cancel the order due to currency volatility. The invoice comes due on June 30, 2016. According to volatility alone, which prospective client would be most likely to cancel the order?
1 answer:
Answer:
Brazil
Explanation:
According to the picture below, Brazilian real is the currency that has the lowers currency volatility, its spot is 4.0685, and its forward is 4.1820. These values are way lower than the values of the other three currencies, and for this reason, the CFO should choose the Brazilian client, clearly.
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Answer:
$600 unfavorable
Explanation:
The budgeted cost of producing 14,000 units at $5.50 per unit and with fixed costs of $19,400 is:
The variance is given by subtracting the budgeted cost by the actual cost ($97,000):
Since the variance is negative, the variance is unfavorable