Assume the Cost of Transporting Computers from US to Japan

question 38

Multiple Choice

Assume the cost of transporting computers from US to Japan is greater than the pre-trade price difference for computers between US and Japan.Trade in computers between US and Japan will:

• A)be very profitable for both parties.
• B)be a breakeven proposition for both parties.
• C)occur.
• D)not occur.

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Definitions:

Net Operating Income

Net Operating Income (NOI) is the total pre-tax profit a company generates from its operations, excluding expenses such as interest and taxes.

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed manufacturing overhead.

Net Operating Income

Profit or loss from a company's operations after all operating expenses are subtracted from operating revenues, but before interest and taxes are deducted.

Variable Costing

Variable costing is an accounting method that only considers variable costs in the calculation of the cost of goods sold, excluding fixed costs.