Companies Such as Coca-Cola Generate More Than Half Their Annual

question 58

Multiple Choice

Companies such as Coca-Cola generate more than half their annual revenues from sales outside the United States, including Europe. If the dollar gets stronger relative to the euro, what will be the financial impact on the company?

• A) Overall earnings will increase
• B) Earnings will decrease in euros, but increase in dollars
• C) Overall earnings will decrease
• D) Earnings will increase in euros, but decrease in dollars

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Definitions:

Materials Price Variance

The difference between the actual cost of materials and the standard or expected cost.

Standard Costs

Predetermined costing used in budgeting and decision-making, representing an expected cost under normal conditions.

Overhead Volume Variance

The difference between the budgeted overhead based on standard hours allowed and the actual overhead incurred, due to differences in activity levels.

Unfavorable Labor Efficiency Variance

A financial term indicating that the actual labor time to produce goods or services was higher than the budgeted or standard labor time, resulting in increased costs.