​Graylon, Inc

question 106

Multiple Choice

​Graylon, Inc., based in Washington, exports products to a German firm and will receive payment of €200,000 in three months. On June 1, the spot rate of the euro was $1.12, and the 3-month forward rate was $1.10. On June 1, Graylon negotiated a forward contract with a bank to sell €200,000 forward in three months. The spot rate of the euro on September 1 is $1.15. Graylon will receive $____ for the euros.

• A) ​224,000
• B) ​220,000
• C) ​200,000
• D) ​230,000

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Definitions:

Cost Of Goods Sold

The direct costs attributed to the production of the goods sold by a company, including the cost of the materials and labor directly involved.

Manufacturing Overhead

All production costs other than direct materials and direct labor that are incurred in the manufacturing process and need to be allocated to produced goods.

Manufacturing Overhead Applied

The portion of manufacturing overhead costs assigned to individual units of production, based on a predetermined rate or method.

T-Accounts

A basic accounting tool used to visualize the effects of transactions on accounts, showing debits on the left and credits on the right.