If Foreign-Exchange Traders on One Day Want to Exchange $60

question 183

Multiple Choice

If foreign-exchange traders on one day want to exchange $60 million for pesos, to enforce the peg the Mexican government will need to come up with

• A) P1,200 million.
• B) P0.33 million.
• C) P3 million.
• D) P80 million.

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Definitions:

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production, such as salaries of supervisors and rent of the factory.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted; it contributes towards covering fixed costs and generating profit.

Direct Labor

The wages paid to workers who physically produce products or are directly involved in providing services.

Fixed Manufacturing Overhead

The consistent expenses tied to manufacturing that do not vary with the level of production, such as salaries of managerial staff and depreciation of equipment.