Which One of the Following Sets of Exchange Rates Shows

question 9

Multiple Choice

Which one of the following sets of exchange rates shows "cross-rate equality" (or"consistent cross rates") ?

• A) 50 Indian rupees = $1; $2 = 1; 25 Indian rupees = 1
• B) 1 Indian rupee = 1.5 Pakistani rupees; 50 Pakistani rupees = 1 Singapore Dollar; 1 Singapore dollar = 75 Indian rupees
• C) 2 Swiss francs = $1; 1 Swiss franc = € ; €1 = $1.50
• D) $2 = 1; €1.5 = 1; €1 = $0.75

---

Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, based on estimated overhead costs and activity levels, for assigning manufacturing overhead to products.

Variable Component

A portion of costs that varies directly with the level of production or operation activity.

Predetermined Overhead Rate

An estimated rate used to assign overhead costs to products or services, based on a planned amount of cost and activity level.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production output, such as rent and salaries of managerial staff.