Heinz Uses 2000 Tons of Corn Syrup Each Year as an Ingredient

question 23

Multiple Choice

Heinz uses 2000 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 $15,000 per ton over the next year?

• A)+$5 million
• B)-$10 million
• C)$0
• D)+$10 million
• E)-$5 million

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Definitions:

Pressure Ulcer

An injury to the skin and underlying tissue, usually over a bony area, caused by prolonged pressure.

Nonblanchable Redness

A skin condition where red spots do not lighten or disappear when pressed, often an early sign of pressure ulcers.

Stage II Pressure Ulcer

A pressure injury characterized by partial-thickness skin loss, presenting as a blister or an open sore, often due to prolonged pressure on the skin.

Coccyx

The small bone at the base of the spine, commonly referred to as the tailbone, which consists of three to five fused vertebrae.