A US Company Has a Subsidiary Located in Great Britain

question 24

Multiple Choice

A U.S. company has a subsidiary located in Great Britain. Information for the subsidiary for the year ended December 31, 2006, is as follows:
$\begin{array}{ll}&\text { British pound }\\\text { Gross profit margin } & 40 \% \\\text { Inventory } & 2,000\\\\&\text { Exchange Rate }\\\text { Balance sheet date } & 1 \text { pound }=\$ 1.6 \\\text { Average exchange rate } & 1 \text { pound }=\$ 1.5 \\\text { Historical rate } & 1 \text { pound }=\$ 1.4\end{array}$

-If the British pound was determined to be the functional currency, what would inventory be in US dollars?

• A)$3,500
• B)$3,200
• C)$3,000
• D)$2,800

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Definitions:

Commitment

The state or quality of being dedicated to a cause, activity, or job; wholehearted devotion.

Affective Organizational Commitment

The emotional attachment and identification an employee has with their organization, influencing their desire to remain part of it.

Coping

The process of managing external or internal demands that are perceived as taxing or exceeding personal resources.

Rapid Change

A situation or event that evolves quickly over a short period of time, often with profound effects.