Some Analysts Have Suggested That There Is an Inverse Correlation

question 33

Multiple Choice

Some analysts have suggested that there is an inverse correlation between the daily value of the dollar and the Dow Jones Industrial Average. Such analysts claim that this inverse relation may be due to the fact that many U.S. companies receive revenues from their operations overseas, making the profits of their foreign subsidiaries more valuable when the dollar depreciates. If true, this relation would be an example of

• A) economic exposure.
• B) accounting exposure.
• C) transaction exposure.
• D) multinational exposure.

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity of materials supposed to be used, multiplied by the standard cost per unit.

Standard Quantity

The predetermined amount of materials or inputs that should be used in the production of goods or services under normal operating conditions.

Standard Price

A predetermined cost assigned to goods and services, used for budgeting, cost control, and performance evaluation purposes.

Materials Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the actual quantity used.