Exhibit 35-4 Refer to Exhibit 35-4. Under a fixed exchange rate system, at the exchange rate of E 3, the dollar is __________ an
d there is a __________.
1 answer:
Please find diagram for question attached
Question options:
a.
overvalued; surplus of dollars
b.
undervalued; shortage of pesos
c.
overvalued; shortage of dollars
d.
undervalued; surplus of pesos
Answer:
Overvalued and there is a shortage of dollars
Explanation:
An increase in dollar price to buy peso means that dollar here is overvalued as it is above the equilibrium price(E2),and therefore it would be expensive to buy goods that are sold for a certain amount of dollars or in dollar currency with the Mexican pesos. This is because the fixed exchange rate system tries to ensure smooth and inexpensive trade between countries as it has to do with currency trading barriers by pegging a currency to another(in this case dollars) but here the dollar price increase for peso makes it more expensive to buy dollar products with pesos. Also this is caused here by the shortage of dollars.
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Answer:
The total cost of goods sold = $70,000
Explanation:
Given:
Initial inventory at the start of the year for Jackson Co. = $20,000
Total cost of purchases made during the year = $80,000
Inventory remaining at the end of the year = $30,000
Solution:
Total inventory for Jackson Co. during the year =
Inventory remaining at the end of the year = $30,000
The cost of the goods sold can be calculated by subtracting the remaining inventory from the total inventory.
Thus, cost of goods sold can be given as :
⇒
⇒
The total cost of goods sold = $70,000