Subaru’s Sales Boom Thanks to the Weaker Yen

For the Japanese carmaker Subaru, a sharp fall in the value of the yen against the U.S. dollar has turned a problem—the lack of U.S. production—into an unexpected sales boom. Subaru, which is a niche player in the global auto industry, has long bucked the trend among its Japanese rivals of establishing significant manufacturing facilities in the North American market. Instead, the company has chosen to concentrate most of its manufacturing in Japan in order to achieve economies of scale at its home plants, exporting its production to the United States. Subaru still makes 80 percent of its vehicles at home, compared with 21 percent for Honda.

Back in 2012, this strategy was viewed as something of a liability. In those days, 1 U.S. dollar bought only 80 Japanese yen. The strong yen meant that Subaru cars were being priced out of the U.S. market. Japanese companies like Honda and Toyota, which had substantial production in the United States, gained business at Subaru’s expense. But from 2012 onward, with Japan mired in recession and consumer prices falling, the country’s central bank repeatedly cut interest rates in an attempt to stimulate the economy. As interest rates fell in Japan, investors moved money out of the country, selling yen and buying the U.S. dollar. They used those dollars to invest in U.S. stocks and bonds, where they anticipated a greater return. As a consequence, the price of yen in terms of dollars fell. By December 2015, 1 dollar bought 120 yen, representing a 50 percent fall in the value of the yen against the U.S. dollar since 2012.   

For Subaru, the depreciation in the value of the yen has given it a pricing advantage and driven a sales boom. Demand for Subaru cars in the United States has been so strong that the automaker has been struggling to keep up. The profits of Subaru’s parent company, Fuji Heavy Industries, have surged. In February 2015, Fuji announced that it would earn record operating profits of around ¥410 billion ($3.5 billion U.S.) for the financial year ending March 2015. Subaru’s profit margin has increased to 14.4 percent, compared with 5.6 percent for Honda, a company that is heavily dependent on U.S. production. The good times continued in 2015, with Subaru posting record profits in the quarter ending December 31, 2015.

Despite its current pricing advantage, Subaru is moving to increase its U.S. production. It plans to expand its sole plant in the United States, in Indiana, by March 2017, with a goal of making 310,000 a year, up from 200,000 currently. When asked why it is doing this, Subaru’s management notes that the yen will not stay weak against the dollar forever, and it is wise to expand local production as a hedge against future increases in the value of the yen. Indeed, when the Bank of Japan decided to set a key interest rate below zero in early February 2016, the yen started to appreciate against the U.S. dollar, presumably on expectations that negative interest rates would finally help stimulate Japan’s sluggish economy. By late March 2016, the yen had appreciated against the dollar and was trading at $1 = ¥112.

Question 1: As Subaru expands into different countries, we will face increased foreign currency risk. Discuss different modes of currency risk and how each should be managed.

Question 2: When evaluating which foreign markets to serve, Subaru must consider certain variables that influence the location-specific costs and benefits of serving those markets. Identify several of the most important variables to consider and the implications of each on potential profitability.

Question 3: As Subaru implements it international operations, we will need to consider to what degree we delegate decision making to our foreign subsidiaries. Explain several advantages and disadvantages of centralized versus decentralized decision making.

Question 4: What are some of the most important considerations we should evaluate to best configure our production and supply chain operations. Provide specific details for each consideration.

Question 5: Discuss political, economic and legal criteria to assess the attractiveness of doing business in different country-specific locations.   

1. Which of the following statements about the direct/indirect cost classification is NOT true?

a. Indirect costs are always traced.

b. Indirect costs are always allocated.

c. The design of operations affects the direct/indirect classification.

d. The direct/indirect classification depends on the choice of cost object

15) Which is true on variable costs?

a. increase in total when the actual level of activity increases

b. are always indirect costs

c. include most personnel costs and depreciation on machinery

d. can always be traced directly to the cost object

2. One of the first steps to take when using CVP analysis to help make decisions is:

a. calculation of the degree of operating leverage for the company.

b. estimating how many products will have to be sold to make a decent profit.

c. identifying which costs are variable and which costs are fixed.

d. finding out where the total costs line intersects with the total revenues line on a graph

3. Depletion is defined as:

a. Is an unrealised expense reported in equity.

b. Is also called depreciation.

c. Is also called amortization.

d. Is the process of allocating the cost of natural resources to periods in which they are consumed.

4. Net income divided by net sales called

1. Profit margin
2. Gross margin
3. Revenue
4. Retained earnings

5. One of the first steps to take when using Cost Volume Profit (CVP) analysis to help make decisions is:

1. Determine fixed and variable cost of the company
2. Identify and forecast sales units to be sold
3. Finding out which total cost lines intersects with total revenue lines in graph
4. None of the above.

1. Accounting for sole proprietorship is the same as accounting for which business?

1. Private Limited Corporation
2. Partnership accounting except for withdrawal and capital is account separately for each partner
3. Cooperative societies
4. Public listed companies

2. Which of the following statements refers to management accounting information?

Select one:

a. It primarily measures and records business transactions.

b. The audience tends to be stockholders, creditors, and tax authorities.

c. The reports are generally delayed and historical.

d. There are no regulations governing the reports.

3. For next year, Rich S/B has budgeted sales of 40,000 units, target ending finished goods inventory of 1,500 units, and beginning finished goods inventory of 900 units. All other inventories are zero. How many units should be produced next year?

a. 30,000 units

b. 29,400 units

c. 32,400 units

d. 40,600 units

This accounting subject. Please help with multiple-choice questions. Thank you.

The primary difference between a FUTA and SUTA periodic report is:

a.the FUTA report is an annual tax return, whereas the SUTA reports are filed quarterly.

b.the SUTA report is filed with the IRS, whereas the FUTA report is filed with the Social Security Administration.

c.the FUTA report is quarterly, whereas the SUTA reports are filed annually.

d.there is no difference, they are replicated reports.

Buckwheat Musical Instruments LLC (not in a credit reduction state) made all of its SUTA payments on a timely basis. If they have the following FUTA taxable wages in 2019, by quarter: $359,000, $47,000, $42,000, $18,000, then the third quarter deposit would be:

a.$2,688

b.$534

c.$500

d.$0

The primary difference between a FUTA and SUTA periodic report is:

a.the FUTA report is an annual tax return, whereas the SUTA reports are filed quarterly.

b.the SUTA report is filed with the IRS, whereas the FUTA report is filed with the Social Security Administration.

c.the FUTA report is quarterly, whereas the SUTA reports are filed annually.

d.there is no difference, they are replicated reports.

Buckwheat Musical Instruments LLC (not in a credit reduction state) made all of its SUTA payments on a timely basis. If they have the following FUTA taxable wages in 2019, by quarter: $359,000, $47,000, $42,000, $18,000, then the third quarter deposit would be:

a.$2,688

b.$534

c.$500

d.$0

In a company, beginning capital balances on June 1, 2020, are Coo $53,000 and Vid $65,500. During the month, drawings were Coo $8,200 and Vid $6,700. Net income was $30,000, and the partners share the income based on interest allowances of 10% on beginning capital balances and share the remaining income equally. What is the division of net income for Coo?

In a company, beginning capital balances on second quarter of 2020, are Coo $72,000 and Vid $67,500. During the quarter, drawings were Coo $11,500 and Vid $9,900. Net income was $37,000, and the partners share income equally. What is the company’s total equity in its statement of financial position at June 30, 2020?

Tangshang Industries production budget from the 2^nd quarter of 2018, projected the following amounts of units to be produced:

April 1,000 units

May    1,200 units

June    1,250 units

Each unit requires 2 parts of component A and 3 parts of component B. Component A cost is $1.25 per unit and component B cost is $.80 per unit.

A. Calculate the Direct Material budgeted cost for May 2018

B. Calculate the Direct Material budgeted cost for the quarter April - June 2018

C. The raw materials inventory policy is 0 ending inventory, 0 beginning inventory. How much inventory of component A is required in April 2018?

Consider the​ table, showing the official mean weight and estimated standard deviation for five U.S. coins. Suppose a vending machine is designed to reject all coins with weights more than 1 standard deviation above or below the mean. Coin Weight (grams) Estimated standard deviation (grams) Cent 2.500 0.06 Nickel 5.000 0.08 Dime 2.268 0.06 Quarter 5.670 0.06 Half dollar 11.340 0.14 For each​ coin, find the range of weights that are acceptable to the vending machine. Complete the table below. Coin Range of weight​ (grams)

Cent ___ ___ Nickel ___ ___ Dime ___ ___ Quarter ___ ___ Half dollar ___ ___​(Round to three decimal places as​ needed.)

Candice Corporation produces reusable Christmas cards in two departments: Printing and Laminating. These departments are supported by two service departments: Personnel and Maintenance. Personnel use the number of employees as an allocation base and Maintenance uses machine hours. The expected level of activity for next quarter is shown below:

                                                No. Of Employees                     Machine hours

Personnel                                              40                                -

Maintenance                                         60                                -                                               

Printing                                                120                              60, 000

Laminating                                           180                              40, 000

Allocations are made in the order shown below. Budgeted costs for next quarter are P93, 000 for Personnel and P68, 000 for Maintenance.

Required:

Total amount of service cost that should be allocated to the printing and laminating department under

1. Direct method
2. Step method

Given the following information for Nugget Corporation, answer the questions below.

Each question should have one amount in the answer field.

You must format your answers as follows: $x,xxx

Total collections from cash sales for the quarter ending March 31, 2018.

Total collections from credit sales for the quarter ending March 31, 2018.

Researchers have found that a significant proportion of women, particularly women in heterosexual relationships, fake or have faked orgasm. Based on what we've read this quarter (that means, do your best to try to be sociologically analytical), why do you think women sometimes fake orgasm? What does it have to do with gender roles and/or expectations? What does it have to do with messages girls and women learn about sexuality? And finally, who "benefits" from women faking orgasms, and who is "harmed?" To do well on this question, you should refer to this week's readings, as well as course material about gender roles from earlier in the quarter.