International Accounting
International Accounting
5th Edition
ISBN: 9781259747984
Author: Doupnik, Timothy S., Finn, Mark T., Gotti, Giorgio
Publisher: Mcgraw-hill Education,
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Chapter 10, Problem 3EP

a.

To determine

Compute the total budget variance for the current year using all the five combinations.

b.

To determine

Recommend the management as to which combination in ‘sub-part a.’ should be used if the manager of Country M’s subsidiary does not have the authority to hedge against changes in exchange rate.

c.

To determine

Recommend the managers as to which combination in ‘sub-part a’ should be used if the manager of Country M’s subsidiary has the authority to hedge against the changes in exchange rate.

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N2. Account
Required: 1) Construct a material usage and purchases budget of the Bara Enterprise
Suppose that Kittle Co. is a U.S. based MNC that is considering setting up a subsidiary in Singapore. Kittle would like this subsidiary to produce and sell guitars locally in Singapore, and needs assistance with capital budgeting. The duration of this project is four years, with an initial investment of S$20,000,000 (Singapore dollars). Kittle Co. managers have also provided you with forecasted expense data, including variable cost per unit, total variable cost, annual lease expense, depreciation, as well as other fixed annual overhead expense, over the next four years. The following table shows the forecasted expense data along side the previous forecasts provided by Kittle management. Complete row 9 of the table, filling in the total expense for the project for each of the 4 years. 1. Demand 2. Price per Unit 3. Total Revenue 4. Variable Cost Per Unit 5. Total Variable Cost 6. Annual Lease Expense 7. Other Fixed Annual Expense 8. Noncash Expense (Depreciation) 9. Total Expense Year 0…
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