A Pair of Jeans Cost $25 in the U

question 87

Multiple Choice

A pair of jeans cost $25 in the U.S.and 1600 dinar in Algeria.If the nominal exchange rate is 75 dinar per U.S.dollar,then the real exchange rate is

• A)more than one,so a profit could be made by buying jeans in Algeria and selling them in the U.S.
• B)more than one,so a profit could be made by buying jeans in the U.S.and selling them in Algeria.
• C)less than one,so a profit could be made by buying jeans in Algeria and selling them in the U.S.
• D)less than one,so a profit could be made by buying jeans in the U.S.and selling them in Algeria.

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Definitions:

Job-Order Costing System

A costing method that accumulates manufacturing costs separately for each job.

Direct Labor Cost

The total expense that a company incurs for labor directly involved in the production of goods or services, including wages and benefits.

Machine-Hours

A measure of production time, tracking how many hours machines are operating in the manufacturing process.

Predetermined Overhead Rate

This rate is calculated before the period begins and is used to apply manufacturing overhead costs to products based on a consistent formula.