A company has production facilities in several countries. Some of the products they sell are produced in stages (Raw Materials -> Pre-Assembly -> Assembly -> Finished Product) based on the technologies and materials involved (see Table 1).
Based on the exchange rate information provided below calculate the following:
1. The difference between the planned product cost and the actual cost?
2. What was the impact on Sales and Profit?
Table 1: Production Scenarios
|
Product
|
Pre-Assembly
|
Assembly
|
Country Sold In
|
Units Sold
|
|
A
|
US
|
Mexico
|
Europe
|
150,000
|
|
B
|
Mexico
|
US
|
China
|
600,000
|
|
C
|
Canada
|
Japan
|
Korea
|
75,000
|
Table 2: Planned Costs and Revenue (per Unit in USD)
|
Product
|
Raw Materials
|
Pre Assembly
|
Assembly
|
Total cost of goods
|
Sale Price
|
Plan Gross Profit
|
|
A
|
$ 100USD
|
$ 250 USD
|
$ 50 USD
|
$ 400 USD
|
$ 900 USD
|
$ 500 USD
|
|
B
|
$ 150
|
$ 50
|
$ 175
|
$ 375
|
$ 675
|
$ 300
|
|
C
|
$ 75
|
$ 300
|
$ 250
|
$ 625
|
$ 1,200
|
$ 575
|
Table 3: Exchange Rates Applied at each stage (1 USD buys: X of Target Currency)
|
Table 3: Exchange Rates Applied at each stage (1 USD buys: X of Target Currency)
|
|
Currency
|
Raw Materials
|
Pre Assembly
|
Assembly
|
Cost of goods
|
Points of Sales
|
|
USD
|
1:1
|
1.0000
|
1.0000
|
1.0000
|
1.0000
|
|
Yuan (China)
|
1:6,2190
|
6.2190
|
6.219
|
6.7400
|
6.2197
|
|
Peso
|
1: 12,586
|
12.992
|
13.035
|
13.456
|
13.409
|
|
Canadian Dollar
|
1:0.986
|
0.9830
|
0.9810
|
0.9999
|
1.1500
|
|
Yen
|
1: 89.995
|
90.000
|
89.999
|
89.132
|
90.750
|
|
Wou (Korea)
|
1, 057.8
|
1.058.1
|
1.058.5
|
1.058.8
|
1.060.0
|
|
Euro
|
1: 0.730
|
0.7820
|
0.8010
|
0.7530
|
0.7270
|