Which of the Following Statements Concerning the Effects of Fluctuating

question 53

Multiple Choice

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?

• A) Fluctuating exchange rates do not pose significant risks to a company's competitiveness in foreign markets.
• B) The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.
• C) Companies that are manufacturing goods in a particular country and are exporting much of what they produce are disadvantaged when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
• D) Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
• E) Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

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Definitions:

Freight-Out

The cost of shipping goods to customers, which is typically recorded as a selling expense.

Production Budget

A plan that outlines the number of units to be produced within a specific period to meet anticipated sales and inventory needs.

Beginning Inventory

The value of goods available for sale at the start of an accounting period.

Administrative Expense

Expenses that are not directly tied to the production of goods or services, including salaries of executive officers, legal and office expenses.