Martin Corporation currently sells widgets at a price of $9.00 per unit. Its var

Question

Martin Corporation currently sells widgets at a price of $9.00 per unit. Its variable cost is $4.00 per unit while fixed costs are $400,000. At what quantity sold will the firm breakeven? O44,444 units 50,000 units 80,000 units O 100,000 QUESTION 15 The current exchange rate is $1.00 1.50 Swiss franc. The exchange rate is expected to be $1.00 1.25 Swiss franc in six months. The U.S. dollar is expected to appreciate and the US. will export more to Switzerland appreciate and the U.S. will import more from Switzerland O depreciate and the U.S. will export more to Switzerland depreciate and the U.S. will import more from Switzerland QUESTION 16 Suppose the exchange rate between U.S. dollars and Swiss francs is $1.00 cross rate of the Swiss franc to the euro (SFleuro)? 1.50 Swiss franc and the exchange rate between the US. dollar and the euro is $1.00 1.15 euros. What is the 0.579 1.725 0.767 1.304

Explanation / Answer

14. Breakeven Quantity can be found as:

Q = Fixed Costs / (Selling Price - Variable Cost)

= $400,000/($9 - $4) = $400,000/$5 = 80,000 units

Option "C" is correct.

15. Option "C" is correct as this means we can purchase more of dollar for less of euro which makes exports cheaper.

16. SF/Euro = SF/$ x [1/(Euro/$)]

= 1.50SF/$1 x [1/(1.15 Euro/$1)]

= 1.50SF/$1 x $0.87/1 Euro = 1.304SF/1 Euro

Option "D" is correct.

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