Detroit Based Auto Corporation,purchased Ancillaries from a Japanese Firm on December

question 15

Multiple Choice

Detroit based Auto Corporation,purchased ancillaries from a Japanese firm on December 1,2008,for 1,000,000 Yen,when the spot rate for Yen was $.0095.On December 31,2008,the spot rate stood at $.0096.On January 10,2009 Auto paid 1,000,000 Yen acquired at a rate of $.0094.Auto's income statements should report a foreign exchange gain or loss for the years ended December 31,2008 and 2009 of:

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Variable Manufacturing Cost

A cost that varies with the level of output production which includes direct materials, direct labor, and variable manufacturing overhead.

Fixed Costs

Costs that remain constant in total regardless of changes in the level of production or sales volume.

Overhead Allocation

The process of distributing indirect costs to products, services, or departments based on relevant allocation bases.

Cost-Based Pricing

A strategy for setting prices where a specific additional amount is added to the product's unit cost to determine the sale price.