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ch4aika [34]
3 years ago
9

Because of the high volume of bicycles as a common form of transportation in Beijing and Shanghai, Charles wants to sell his bic

ycle horns to these markets. In this case, the exchange rate is $1 U.S. dollar = 6.42 Chinese yuan. Economically speaking, how are his prospects?A) Not good. The Chinese would not see value in a horn because they are accustomed to just yell at each other in traffic.B) Good because the yuan has strength against the dollar. The Chinese have 6.42 yuan to spend compared to $1 U.S. dollar.C) It depends on the value of the Chinese yuan in relation to the dollar.D) Pretty good because the U.S. dollar is down against the Chinese yuan.
Business
1 answer:
drek231 [11]3 years ago
4 0

Answer:

C) It depends on the value of the Chinese yuan in relation to the dollar.

Explanation:

The exchange rate of a currency gives you a nominal value of the local currency against another foreign currency, but just by having a number doesn't mean a lot. First of all we do not know how much can you really buy with 6.42 yuans, so we are not able to know if $1 is cheap or expensive.

Assuming that the price of the horns is competitive, what can really affect this business is the fluctuations of the currency value. If the yuan appreciates against the dollar, the horns will become cheaper, but if the yuan depreciates against the dollar, the horns will become more expensive.

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3 years ago
Therrell Corporation has two divisions: Bulb Division and Seed Division. The following report is for the most recent operating p
amm1812

Answer:

a. For Bulb = $183,418.92

b. For Seed = $96,759.49

c. Break even = $336,144.74

Explanation:

Sales = Bulb Division + Seed Division

= $234,000 + $156,000

= $390,000

Variable Expense = Bulb Division + Seed Division

= $60,840 + $32,760

= $93,600

Contribution margin for bulb = Sales - Variable

= $234,000 - $60,840

= $173,160

Contribution margin for Seed division = Sales - Variable

= $156,000 - $32,760

= $123,240

Total = $390,000 - $93,600

= $296,400

Division Income for bulb = contribution margin - Traceable fixed expenses

= $173,160 - $135,730

= $37,430

Division Income for seed division = contribution margin - Traceable fixed expenses

= $123,240 - $76,440

= $46,800

Total of Division income = $296,400 - $212,170

= $84,230

Common Fixed expenses = $25,980 + $17,320

= $43,300

Income = Total of Division income - Common Fixed expenses

= $84,230 - $43,300

= $40,930

Contribution margin ratio for bulb = Contribution ÷ Sales × 100

= $173,160 ÷ $234,000 × 100

= 74.00%

Contribution margin ratio for seed = Contribution ÷ Sales × 100

= $123,240 ÷ $156,000 × 100

= 79%

Total Contribution margin ratio for bulb and seed  = Contribution ÷ Sales × 100

= ($173,160 + $123,240) ÷ $390,000 × 100

= $296,400 ÷ $390,000 × 100

= 76%

a and b. Division’s break-even in sales dollars = Fixed costs ÷ Contribution margin ratio

For Bulb = $183,418.92

For Seed = $96,759.49

c. company’s overall break - even in sales dollars

= (212170 + 43300) ÷ 76%

= $336,144.74

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