question archive 1) The selling price of imported olive oil is $20 per case
1) The selling price of imported olive oil is $20 per case
Subject:FinancePrice:3.87 Bought7
1) The selling price of imported olive oil is $20 per case. Your cost is 15 Euros per case, and the exchange rate is currently 1.25, so it takes 1.25 Euros to buy $1. Your argest customer has ordered 15,000 cases of olive oil. How much is the pretax profit for this transaction?
$120,000
$100,000
$90,000
$80,000
$60,000
2. The Simpson Corporation is calculating their adjusted balance sheet into U.S. Dollars. The exchange rate at the beginning of the year was $1 Euro $1 U.S. dollar The current exchange rate is.80 Euros to $1.00. Net Income for the year was zero. How much is the accounting gain/loss due to the exchange rate change?
Beginning Balance Sheet:
Assets-3,000 Euros
Equity 1,500 Euros .
Liabilities 1,500 Euros
$125, gain
$375, loss
$375,gain
$500, loss
$500, gain
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Answer:
1)
Cost = 15 Euros = 15/1.25 dollars = $12
Profit = Selling price - cost = $20 - $12 = $8 per case
Total profit on the order = $8*15000 = $120000
Option 1.
2)
Aseets will become 3000*1/0.8=3750 USD
Liabilities would become 1500*1/0.8=1875 USD
hence, equity=3750-1875=1875 USD
So, gain of 1875-1500=375 USD
Option C
