On December 1,20X5,Gillard Ltd

question 5

Multiple Choice

On December 1,20X5,Gillard Ltd.sold goods to International Traders Ltd. ,a company located in Switzerland for 500,000 Swiss francs (CHF) .At the date of sale,the spot rate was CHF1 = $1.0329.On the same date,Gillard acquired a 90-day forward contract at a rate of CHF1 = $1.0315.On March 1,20X6,Gillard receives full payment from International Traders and delivered the Swiss francs in execution of the forward contract.The spot rate at March 1,20X6 was CHF1 = $1.0287.What is the net exchange gain (loss) on the forward contract?

• A)$(2,100)
• B)$(700)
• C)$700
• D)$1,400

Recognize the potential for mutual benefits from trade between individuals or nations.

Understand how trade can lead to an increase in overall economic efficiency and output.

Understand the principle of comparative advantage and its implications for international trade.

Analyze the impact of specializing based on comparative advantage on a country's production and consumption possibilities.

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Definitions:

Absorption Costing

A financial approach that encompasses all production expenses, such as direct materials, direct labor, and all manufacturing overhead costs, both variable and fixed, into the product's price.

Direct Labor Cost

Direct labor cost is the total expense that a company incurs for labor directly involved in the manufacturing of a product or delivery of a service.

Reconciliation

The process of ensuring two sets of records or accounts are in agreement, often used in financial accounting to match bank statements with internal records.

Super-Variable Costing

No definition as "Super-variable Costing" is not recognized as an established term in finance or accounting.