Assume the Exchange Rate Between the Dollar and Yen Is

question 22

Multiple Choice

Assume the exchange rate between the dollar and yen is ¥80= $1. Suppose that the exchange rate changes to ¥75 = $1. As a result of the change, there will be:

• A)more Japanese goods sold in Australia and less Australian goods sold in Japan.
• B)less Japanese goods sold in Australia and more Australian goods sold in Japan.
• C)more Japanese goods sold in Australia and the same amount of Australian goods sold in Japan.
• D)the same number of Japanese goods sold in Australia and less Australian goods sold in Japan.

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Definitions:

Absorption Costing

A method of costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Operating Income

Operating income is the profit realized from a company's regular business operations, excluding deductions of interest and taxes, as well as any gains or losses from non-operating activities.

Direct Costing

A cost accounting method where only variable costs (direct materials, direct labor, variable manufacturing overhead) are included in product costs, fixed overhead costs are expensed in the period they are incurred.

Cost Of Goods Manufactured

The total cost of making and finishing a product.