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Planned product cost and the actual cost

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

 

 

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