Answered: Pro forma income statement, in won…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Pro forma income statement, in won (millions)

sales (1,000,000 @ 5,000 won/set)............. 5,000

costs..............................................................(4,000)

labor-skilled....................................(1,700)

raw materials:

imported (duty-free)......................(1,000)

local.................................................(500)

overhead..........................................(300)

interest.............................................(500)

profit (before tax) 10%........................1,000

If the won devalues, from w484/$ (won per dollar) to w580/$, recompute ALL VALUES on the statement with the new exchange rate. Assume domestic sales remain the same.

**Pro Forma Income Statement, in Won (Millions)**

- **Sales** (1,000,000 @ 5,000 won/set): 5,000

- **Costs**: (4,000)
- **Labor-skilled**: (1,700)
- **Raw Materials**:
- Imported (duty-free): (1,000)
- Local: (500)
- **Overhead**: (300)
- **Interest**: (500)

- **Profit (before tax) 10%**: 1,000

**Note**: If the won devalues from w484/$ to w580/$, recompute the statement assuming domestic sales remain the same.

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