If the British Subsidiary of a European Firm Has Net

question 39

Multiple Choice

If the British subsidiary of a European firm has net exposed assets of £125,000, and the pound increases in value from €1.40/£ to €1.44/£, the European firm has a translation:

• A) loss of €5,000.
• B) gain of €5,000.
• C) gain of £5,000.
• D) loss of £5,000.

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Definitions:

Machine Hours

A measure of the amount of time a machine is operated, used in allocating manufacturing costs to units of product.

Finished Goods

Items that are finished being made but have not been purchased by consumers yet.

Cost of Goods Sold

The total cost of manufacturing or purchasing the goods that a company sold during a specific period.

Direct Labor Hours

The total hours of labor directly involved in producing goods or providing services, used in calculating labor costs and efficiency.