FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Case-in-brief - Chapter 6 - Argentina Currency Devaluation
Your company is currently operating in Argentina. Management is concerned to what extent the Argentine peso will be devalued.
It wants to examine two scenarios: one where the currency drops 15% and one where it drops 25%. Currently, the exchange rate
is 92 pesos (ARS$ 92) to 1 US dollar (US$1).
Contribution after marketing in Argentina was 21% of sales (see Exhibit). Your goal is to maintain this percentage.
Exhibit: Argentina Contribution after Marketing (ARS$ Argentine Pesos)
Unit Sales
Manufacturer Sales
Costs
Gross Margin
Total Marketing
Units
ARS
%
46
325.9
100%
183.3
56%
142.6
44%
73.3
22%
Contribution after Marketing
69.3
21%
QUESTION 2
How much more sales revenue would be needed in Argentina to maintain your current contribution after marketing?
Additional Manufacturer Sales in Argentine Pesos after 15% drop: 0.000
Additional Manufacturer Sales in Argentine Pesos after 25% drop: 0.000
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Transcribed Image Text:Case-in-brief - Chapter 6 - Argentina Currency Devaluation Your company is currently operating in Argentina. Management is concerned to what extent the Argentine peso will be devalued. It wants to examine two scenarios: one where the currency drops 15% and one where it drops 25%. Currently, the exchange rate is 92 pesos (ARS$ 92) to 1 US dollar (US$1). Contribution after marketing in Argentina was 21% of sales (see Exhibit). Your goal is to maintain this percentage. Exhibit: Argentina Contribution after Marketing (ARS$ Argentine Pesos) Unit Sales Manufacturer Sales Costs Gross Margin Total Marketing Units ARS % 46 325.9 100% 183.3 56% 142.6 44% 73.3 22% Contribution after Marketing 69.3 21% QUESTION 2 How much more sales revenue would be needed in Argentina to maintain your current contribution after marketing? Additional Manufacturer Sales in Argentine Pesos after 15% drop: 0.000 Additional Manufacturer Sales in Argentine Pesos after 25% drop: 0.000
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