Roll over each item on the left to read the description. Identify whether each of the statements is an argument for or an argument against a specific exchange rate regime, then place each item in the correct place on the chart.
2/5 points awarded Government adjusts Fluctuation with limits Scored Reduces uncertainty Argument for Argument Against Market-based Floating exchange rate Uncertainty Market-based Unknown elements Continual government intervention Fixed exchange rate No uncertainty Continual government intervention Managed-float Difficult Fluctuation with limits Difficult Pegged exchange rate Limited options Government adjusts Limited options Target Zone Reduces uncertainty Unknown elements No uncertainty

Answer:

Floating exchange rate

Here the market decides the value of the currency as it trade freely in the market based on supply and demand.

Argument For;

Market Based - It is market based therefore it reflects the true value of the currency.

Argument Against;

Uncertainty -  As it trades according to the whims of supply and demand, telling which direction it will go in terms of value is a difficult undertaking therefore financial decisions based on such are riskier.

Fixed exchange rate

Here the value of the currency is fixed either to the value of another currency or to the price of gold.

Argument For;

No Uncertainty -  As the currency is tied to another currency which is usually more stable or gold, the rate of the currency is more predictable.

Argument Against;

Unknown Elements

Managed float

In this exchange rate regime, the Central bank of a country intervenes in the Foreign exchange market to push or pull the currency in the direction that it prefers.

Argument For;

Government intervention - The Government Intervention ensures that the currency's value remains stable as well as allowing the Central bank to maintain a good balance of payments.

Argument Against;

Difficult - Maintaining the currency within the band preferred in a difficult undertaking that requires constant intervention in the Forex market.

Pegged exchange rate

The Central bank in this instance pegs the currency to a basket of currencies after setting an exchange rate it would prefer and then intervenes in forex market to keep it that way.

Argument For;

Reduces uncertainty - The movement of the currency is more predictable due to it being pegged to a basket of currencies.

Argument Against;

Continual government intervention - As this requires the currency to remain at a certain value, the government will keep intervening to ensure that it stays at that exact level.

Target zone

Here the Central Bank allows the currency to fluctuate on the market albeit with limits placed on how much it can do so.

Argument For;

Fluctuation with limits - By combining fixed regimes with floating regimes, the currency can maintain a semblance of true value whilst still be less uncertain.

Argument Against;

Limited options.

Floating exchange rate

Here the market determines the value of the currency as it trades willingly in the market based on supply and demand.

Argument For;

Market-Based - It is market-based thus it reflects the true value of the currency.

Argument Against;

Uncertainty - As it trades according to the impulses of supply and demand, suggesting which direction it will go in terms of significance is a difficult undertaking therefore financial decisions based on such are riskier.

Fixed exchange rate

Here when the value of the currency is fixed either to the value of another currency or to the price of gold.

Argument For;

No Uncertainty - As the currency is tied to another currency which is usually additional stable or gold when the rate of the currency is more predictable.

Argument Against;

Unexplored Elements

Managed float

In this interaction rate regime, when the Central bank of a country intervenes in the Foreign exchange market to push or pull the currency in the direction that it prefers.

Argument For;

Government intervention - When The Government Intervention ensures that the currency's value stays stable as well as allows the Central bank to maintain a good balance of payments.

Argument Against;

Difficult - When the Maintaining the currency within the band is preferred in a difficult undertaking that is required constant intervention in the Forex market.

Pegged exchange rate

The Central bank in this instance pegs the currency to a basket of currencies after setting an interaction rate it would prefer and also then intervenes in the forex market to keep it that way.

Argument For;

Reduces uncertainty - When The movement of the currency is more predictable due to it being pegged to a basket of currencies.

Argument Against;

Continual government intervention - Now, As this requires the currency to remain at a certain value, the government will keep intervening to ensure that it stays at that exact level.

Target zone

When Here the Central Bank allows the currency to fluctuate on the market albeit with limits placed on how much it can do so.

Argument For;

Fluctuation with limits - By combining improved regimes with floating regimes, the currency can maintain a semblance of true value whilst still being less uncertain.

Argument Against;

Limited choices.

Find more information about Supply and Demand here:

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d. Long term investments in stock were sold for $95600 cash yielding a gain of $17000.

Required:
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AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
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Power and light 48,000
Sales commissions 298,000
Factory insurance 30,000
Production supervisor wages 135,000
Production control wages 32,000
Executive officer salaries 310,000
Materials management wages 39,000
Factory depreciation 22,000
Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only fixed factory costs.
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Total variable factory overhead costs
Fixed factory overhead costs:
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Requried:
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Forten company current year income statement, comparative balance sheets and additional information follow. For the year all sales are credit sales. all credits to accounts recievable reflect cash reciepts from customers. all purchases of inventory are on credit. all debits to account payable reflectr cash payments for inventory and other expenses are paid in advance and are initially debited to prepaid expenses.


Assets 2013 2012
Cash $70,944 $72,000
Accounts receivable 79,125 61,125
Merchandise inventory 259,906 230,800
Prepaid expenses 1,600 2,100
Equipment 162,600 120,000
Accum- depreciation - Equipment (53,800) (60,000)
Total assets $520,375 $426,025

Liabilities and Equity
Accounts payable $58,075 $111,200
Short-term notes payable 10,000 6,000
Long-term notes payable 24,175 43,000
Common stock, $5 par value 167,500 150,000
Paid-in capital excess of par,
common stock 52,500 0
Retained earnings 206,025 115,825
Total liabilities and equity $520,375 $426,025

FORTEN COMPANY Income Statement For Year Ended December 31, 2013

Sales $635,000
Cost of goods sold 306,000
Gross profit 329,000
operating expenses
Depreciation expense $20,000
Other expenses 128,300 148,300
Other gains (losses)
Loss on sale of equipment (4,500)
Income before taxes 176,200
Income taxes expense 31,000
Net income $145,200


Additional information on Year 2013 transactions:

a. The loss on the cash sale of equipment was $4,500 (details in b)
b. Sold equipment costing $45,800 with accumulated depreciation of $26,200, for $15,100 cash.
c. Purchased equipment costing $88,300 by paying $63,000 cash and signing a long-term note payable for the balance.
d. Borrowed $4,000 cash by signing a short-term note payable.
e. Paid $44,125 cash by signing a short-term note payable.
f. Issued 3,500 shares of common stock for $20 cash per share.
g. Declared and paid cash dividends of $53,000.


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c. Clancy purchases a certificate of deposit at his bank.
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80 percent collected in the month of sale.
10 percent collected in the first month after sale.
5 percent collected in the second month after sale.
4 percent collected in the third month after sale.
1 percent uncollectible.
The sales on account have been budgeted for the last seven months as follows:
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July 154,000
August 179,000
September 208,000
October 233,000
November 258,000
December 220,500
Required:
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2. Manufacturing costs:
3. Direct materials $3,360,000.00
4 Direct labor 1,344,000.00
5 Variable manufacturing cost 816,000.00
6 Fixed manufacturing cost 528,000.00 6,048,000.00
7 Selling and administrative expenses:
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9 Fixed 352,000.00 880,000.00

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b. If annual carrying costs are 20 percent of unit cost, what is the optimal order size?





c. If lead time is 5 working days, at what point should the company reorder?