Due to Price Risk from the Foreign Currency Purchase of Aviation

question 417

Multiple Choice

Due to price risk from the foreign currency purchase of aviation fuel, an airliner has purchased forward contracts to hedge against fluctuations in the exchange rate. When recalculating the exchange losses from individual purchases of jet fuel, which of the following details does the internal auditor need to validate? 1. The hedge documentation designating the hedge. 2. The spot exchange rate on the transaction date. 3. The terms of the forward contract. 4. The amount of fuel purchased.

• A) 1 and 2
• B) 1 and 4
• C) 2 and 3
• D) 3 and 4

Understand the impact of activity levels on budgeted and actual costs and incomes.

Interpret and solve for net operating income under different scenarios.

Grasp the impact of cost behavior on budgeting and performance evaluation.

Distinguish between favorable and unfavorable variances and their implications for management.

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Definitions:

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A physiological and psychological state of being awake or reactive to stimuli.

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Groups of people, often youths, who come together and involve themselves in criminal activities and identify themselves with a group identity.

"Real World" Experience

Experiences or knowledge gained through direct, practical involvement in everyday life or work.