Assume the Spot Exchange Rate Is 6

question 40

Multiple Choice

Assume the spot exchange rate is 6.22 Chinese yuan per U.S.dollar.If the inflation rate in China is expected to be double that in the U.S.for the next two years,then the:

• A)exchange rate will decrease.
• B)exchange rate will double.
• C)yuan will appreciate relative to the dollar.
• D)yuan will become more valuable.
• E)dollar will strengthen against the yuan.

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Definitions:

Selling Costs

All costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer.

Indirect Costs

Expenses not directly traceable to a specific cost object, such as a product or project, including utilities, rent, and managerial salaries.

Product Costs

Costs that are directly incurred in the production of goods, including direct materials, direct labor, and manufacturing overhead.

Direct Materials

Raw materials that are directly traceable to the production of a specific product and are a major component of its cost.