a. Assume Crackle exports the batch to the United States, what is its estimated profit/loss in Danish kroner? b. Assume Crackle exports the batch to Great Britain, what is its estimated profit/loss in Danish kroner?

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter10: Measuring Exposure To Exchange Rate Fluctuations
Section: Chapter Questions
Problem 22QA
icon
Related questions
Question

Crackle Cookie Company is a relatively new company and so far has sold its products only in its home country, Denmark. In December, Crackle determined that it had excess capacity to produce more of its special Christmas cookies. It is trying to decide whether to use that capacity to ship a batch of cookies overseas. The marketing department has determined that the United States and Great Britain are the two most viable markets. Crackle has enough excess capacity to produce only one batch, which can be shipped to either country. The materials and labor cost to produce the batch amount to 8,500 kroner. The marketing department, which located a U.S. shipping company that could deliver to either location, also provided the following information.

Required:

a. Assume Crackle exports the batch to the United States, what is its estimated profit/loss in Danish kroner?

b. Assume Crackle exports the batch to Great Britain, what is its estimated profit/loss in Danish kroner?

Shipping cost
Duties/customs charges and
miscellaneous selling expenses
Total sales revenue
Exchange rate data
United States
3,000 U.S. dollars
400 U.S. dollars
5,200 U.S. dollars.
1 krone = 0.166 U.S. dollars
Great Britain
2,000 U.S. dollars.
480 British pounds
2,800 British pounds
1 krone = 0.115 British pounds
Transcribed Image Text:Shipping cost Duties/customs charges and miscellaneous selling expenses Total sales revenue Exchange rate data United States 3,000 U.S. dollars 400 U.S. dollars 5,200 U.S. dollars. 1 krone = 0.166 U.S. dollars Great Britain 2,000 U.S. dollars. 480 British pounds 2,800 British pounds 1 krone = 0.115 British pounds
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
International Financial Management
International Financial Management
Finance
ISBN:
9780357130698
Author:
Madura
Publisher:
Cengage