Heinz Uses 1000 Tons of Corn Syrup Each Year as an Ingredient

question 66

Multiple Choice

Heinz uses 1000 tons of corn syrup each year as an ingredient in its tomato ketchup products.Heinz is concerned about the increase in prices of corn-based products and purchases a fixed-price contract to buy corn syrup at $20,000 per ton.What is the impact on earnings before taxes as opposed to no hedging if the price of corn is $25,000 per ton over the next year?

• A)+$5 million
• B)-$5 million
• C)$0
• D)+$5,000
• E)-$5,000

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Definitions:

Dependent

In context of variables, it refers to a variable whose value is influenced or determined by one or more other variables.

Car Colour

The specific hue or shade of paint chosen or used to finish the exterior surface of an automobile.

Independent

Not influenced or controlled by others in matters of opinion, conduct, etc.; thinking or acting for oneself.

Treatment

In experimental design, the condition applied to subjects or objects to assess its effect on some outcome.