Question
In: Finance
Using the cost and revenue information shown for DeKalb, Inc., determine how the costs, revenue, and...
Using the cost and revenue information shown for DeKalb, Inc.,
determine how the costs, revenue, and cash flow items would be
affected by three possible exchange rate scenarios for the New
Zealand dollar (NZ$): (1)
NZ
$
=
$
.50
NZ
$
=
$
.50
, (2)
NZ
$
=
$
.55
NZ
$
=
$
.55
, and (3)
NZ
$
=
$
.60
NZ
$
=
$
.60
. (Assume U.S. sales will be unaffected by the exchange rate.)
Assume that NZ$ earnings will be remitted to the U.S. parent at the
end of the period. Ignore possible tax effects.
REVENUE AND COST ESTIMATES: DEKALB, INC. (IN MILLIONS OF U.S.
DOLLARS AND NEW ZEALAND DOLLARS)
U.S. BUSINESS NEW ZEALAND BUSINESS
Sales $800 NZ$800
Cost of materials 500 100
Operating Expenses 300 0
Interest expense 100 0
Cash flow −100 NZ$700
Solutions
Expert Solution
The company is more dependant on Newzealand Business for the overall cashflow since US Business as such incurs negative cash flow of $100 and only combining with Newzealand business, gets a positive cash flow.
Also, since the Newzealand earnings are remitted back to US parent, if the NZD appreciates and USD weakens, the cash-flows becomes more favourable since the company gets more of USD for the equivalent NZD.
Workings:
jeff jeffy answered 1 year agoRelated Solutions
Using the following cost and revenue information for Prestige Worldwide (PWW), determine how the costs, revenue,...
Using the following cost and revenue information for Prestige
Worldwide (PWW), determine how the costs, revenue, and cash flow
items would be affected by the possible exchange rate scenarios for
the pound: (1) £ = $1.20, (2) £= $1.25, and (3) £= $1.30. Would
Prestige Worldwide be favorably or unfavorably affected by a
weakening pound? Why? Explain. Assume
that U.S. sales will be unaffected by the exchange rate. Also,
assume that £ earnings will be remitted to the U.S. parent...
Use the cost information below for Ruiz Inc. to determine thetotal manufacturing costs incurred during...
Use the cost information below for Ruiz Inc. to determine the
total manufacturing costs incurred during the year:Work in Process, January 1$53,200Work in Process, December 3138,600Direct materials used$14,100Total factory overhead7,100Direct labor used28,100Multiple Choice$63,900.$102,500.$95,400.$49,300.$14,600.
The revenue and cost information for Odessa Outfitters inc. for 2015 follows: Sales Revenue 560,000 COGS...
The revenue and cost information for Odessa Outfitters inc. for
2015 follows:
Sales Revenue 560,000
COGS (at standart) 342,000
DM price variance 1,000 F
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DL rate varinace
4,000U
DL efficiency variance 2,000 F
Overhead controllable variance 3,500U
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Geraldo Inc. sells several products. Information of average revenue and costs is as follows:
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Selling price per unit
$30.00
Variable costs per unit:
Direct material
$4.13
Direct manufacturing labour
$1.50
Manufacturing overhead
$1.46
Selling costs
$1.85
Annual fixed costs
$110,000
The Geraldo Inc. contribution margin ratio is
33.13%
42.51%
29.82%
63.70%
70.20%
The Geraldo Inc. break-even point in sales dollars is
$156,693.
$156,696.
$156,695.1.
$156,720.
$156,690.
The Geraldo Inc. break-even point in units is
5,223 units....
Geraldo Inc. sells several products. Information of average revenue and costs is as follows:
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Selling price per unit
$30.00
Variable costs per unit:
Direct material
$4.13
Direct manufacturing labour
$1.50
Manufacturing overhead
$1.46
Selling costs
$1.85
Annual fixed costs
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33.13%
42.51%
29.82%
63.70%
70.20%
The Geraldo Inc. break-even point in sales dollars is
$156,693.
$156,696.
$156,695.1.
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$156,690.
The Geraldo Inc. break-even point in units is
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Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost Fixed Costs ATC Average Fixed Costs Average...
Quantity
Total Revenue
Marginal Revenue
Total Cost
Marginal Cost
Fixed Costs
ATC
Average Fixed Costs
Average Variable Costs
0
0
-
10
-
10
-
-
-
1
8
24
14
24
2
16
34
10
17
3
24
42
8
14
4
32
49
7
12.25
5
40
57
8
11.4
6
48
67
10
11.17
7
56
81
14
11.57
8
64
99
18
12.38
9
72
123
24
13.67
1b. At a price of $14, what is...
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Revenue and cost information for the two products from
last
month appear below:
Product L Product V
selling price per unit ........... $15.00 $12.00
variable costs per unit .......... $ 8.00 $ 7.00
For the coming month, Betty would like to use linear
programming
in order to maximize monthly profits.
Each month Betty has 80,000 direct labor hours available and
60,000
machine hours available. Product L requires 5 direct labor...
Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. Perpetual...
Determine the costs assigned to ending inventory and to cost of
goods sold using FIFO.
Perpetual FIFO:
Goods Purchased
Cost of Goods
Sold
Inventory Balance
Date
# of units
Cost per unit
# of units
sold
Cost per unit
Cost of Goods
Sold
# of units
Cost per unit
Inventory Balance
January 1
290
@
$13.60
=
$3,944.00
January 10
260
@
$13.60
=
$3,536.00
30
@
$13.60
=
$408.00
March 14
500
@
$18.60
30
@
$13.60
=
$408.00...
Measuring Economic Exposure. Assume you live in the U.S. Using the following cost and revenue information...
Measuring Economic Exposure. Assume you live in the
U.S. Using the following cost and revenue information
shown for DeKalb, Inc.,
a) determine how the costs, revenue, and net cash flow would be
affected by three possible exchange rate scenarios for the New
Zealand dollar (NZ$):
1) NZ$ = $0.55,
2) NZ$ = $0.60, and
3) NZ$ = $0.65.
b) What is your conclusion?
15
Marks
Note: PCFt is the percentage change in
inflation-adjusted cash flows...
Show and explain how you can use information about revenue and costs to find the point...
Show and explain how you can use information about revenue and
costs to find the point of maximum profit for a firm in a perfectly
competitive market?
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