Please read the brief description and respond to the questions. Please be clear and specific. Case: A company in the U.S. agreed to sell chimney caps to a retailer in Poland. The order was for 100,000 caps. The Polish company is paying 12$ for each cap and will have to make payment in US dollars to the US seller. The U.S. company does not manufacture or assemble the chimney caps but purchases them from a Korean manufacturer. To facilitate the transaction, the U.S. company agrees to pay in Korean Won. The price for each cap is 1000 Won. The U.S. company estimates its marginal (additional cost per cap) costs (for warehousing, insurance, transportation, and so on) as an additional .50 per chimney cap. Exchange rates at the time of signing the agreements are as follows:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer full question please. Answer all questions.
B.
Please read the brief description and respond to the questions. Please be clear and specific.
Case:
A company in the U.S. agreed to sell chimney caps to a retailer in Poland. The order was for 100,000 caps. The
Polish company is paying 12$ for each cap and will have to make payment in US dollars to the US seller. The
U.S. company does not manufacture or assemble the chimney caps but purchases them from a Korean
manufacturer. To facilitate the transaction, the U.S. company agrees to pay in Korean Won. The price for each
cap is 1000 Won. The U.S. company estimates its marginal (additional cost per cap) costs (for warehousing,
insurance, transportation, and so on) as an additional .50 per chimney cap.
Exchange rates at the time of signing the agreements are as follows:
Transcribed Image Text:B. Please read the brief description and respond to the questions. Please be clear and specific. Case: A company in the U.S. agreed to sell chimney caps to a retailer in Poland. The order was for 100,000 caps. The Polish company is paying 12$ for each cap and will have to make payment in US dollars to the US seller. The U.S. company does not manufacture or assemble the chimney caps but purchases them from a Korean manufacturer. To facilitate the transaction, the U.S. company agrees to pay in Korean Won. The price for each cap is 1000 Won. The U.S. company estimates its marginal (additional cost per cap) costs (for warehousing, insurance, transportation, and so on) as an additional .50 per chimney cap. Exchange rates at the time of signing the agreements are as follows:
a) What impact would a depreciation of the Polish Zloty relative to the U.S. dollar have on the
U.S. company's profit loss on this transaction? (increase profit, decrease profit, increase loss,
decrease loss, or no change on line below)
3.
Body
Ans. Why?
Style
Layout
More
Font
Arial
u) What impact would a depreciation of the Polish Zloty relative to the Korean Won have on the
U.S. company's profit/loss? (increase profit, decrcase profit, increase loss, decrease loss, or no
change on line below)
4.
Regular
10 pt
Nane
Character Styles
Ans. Why?
Text Color
Spacing
1.0 - Single
Bullets & Lists None
O Drop Cap
If exchange rates changed to the exchange rate shown below, state/show the amount of the U.S
company's total profit or loss on the deal now? (Show profit or loss calculation clearly).
5.
USDS 1 = 150 WON
USDS 1= Polish Zloty .40
Place word profit or loss on line.
Place amount on line.
Transcribed Image Text:a) What impact would a depreciation of the Polish Zloty relative to the U.S. dollar have on the U.S. company's profit loss on this transaction? (increase profit, decrease profit, increase loss, decrease loss, or no change on line below) 3. Body Ans. Why? Style Layout More Font Arial u) What impact would a depreciation of the Polish Zloty relative to the Korean Won have on the U.S. company's profit/loss? (increase profit, decrcase profit, increase loss, decrease loss, or no change on line below) 4. Regular 10 pt Nane Character Styles Ans. Why? Text Color Spacing 1.0 - Single Bullets & Lists None O Drop Cap If exchange rates changed to the exchange rate shown below, state/show the amount of the U.S company's total profit or loss on the deal now? (Show profit or loss calculation clearly). 5. USDS 1 = 150 WON USDS 1= Polish Zloty .40 Place word profit or loss on line. Place amount on line.
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