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Cloud [144]
2 years ago
11

is (R$), has been trading at R$3.40/US$. Exports to Brazil are currently 50,000 printers per year at the reais-equivalent of $20

0 each. A rumor exists that the reais will be devalued to R$4.00/$ within two weeks by the Brazilian government. Should the deva
Business
1 answer:
tiny-mole [99]2 years ago
8 0

Answer:

Some information was missing, so I looked it up:

Should the devaluation take place, the reais is expected to remain unchanged for another decade.

Accepting this forecast as given, DP faces a pricing decision which must be made before any actual devaluation: DP may either 1) maintain the same reais price and in effect sell for fewer dollars, in which case Brazilian volume will not change or 2) maintain the same dollar price, raise the reais price in Brazil to compensate for the devaluation, and experience a 20% drop in volume. Direct costs in the U.S. are 60% of the U.S. sales price.

What would be the short-run (one-year) implication of each pricing strategy? Which do you recommend?

In the short run:

if you decide to keep the current price in reais, then your contribution margin per unit will decrease from $80 to $50. Total contribution from sales to Brazil will reduce from $4,000,000 to $2,500,000.

If you decide to increase the price in reais, then your contribution margin per unit will remain at $80, but your total sales will fall to 40,000. Total contribution margin from sales to Brazil will reduce from $4,000,000 to $3,200,000

Personally, I would recommend increasing the price since operating profits will reduce in a smaller proportion.

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3 years ago
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Answer:

Inventors create new products.

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2 years ago
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Here is the accounting equation for Sam's auto parts $18,000= $12,000 +$6,000 The owner withdrew $1,500 for personal use. Write
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3 years ago
It’s important to realize that when it comes to distracted driving it is not about bad teens doing bad things, it’s about good t
ValentinkaMS [17]

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True

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3 0
3 years ago
At year-end (December 31), Chan Company estimates its bad debts as 0.70% of its annual credit sales of $862,000. Chan records it
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Answer: Please see the required journals below:

December 31:

Debit Bad debt expense                                $6,034

Credit Allowance for doubtful accounts       $6,034

February 1:

Debit Allowance for doubtful accounts              $431

Credit Accounts receivables                               $431

June 5:

Debit Cash                                                            $431

Credit Bad debt recovery (income statement)   $431

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3 years ago
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