Pfizer (US company) sells a drug in Canada. Sales: CAD 45.0m Variable Costs: USD 10.0m, Euro...
Pfizer (US company) sells a drug in Canada.
- Sales: CAD 45.0m
- Variable Costs: USD 10.0m, Euro 1.5m and CAD 2.0m
- Current exchange rate: CAD 1.25/USD and USD 1.1/Euro.
- Calculate the gross margin in USD: ______
- Calculate the gross margin in CAD: ______
Homework Answers
rate positively ..
| Given that- | |||||||||
| sales = | CAD | 45 | |||||||
| Variable cost | |||||||||
| USD | 10 | ||||||||
| EURO | 1.5 | ||||||||
| CAD | 2 | ||||||||
| USD to CAD exchange rate = 1/1.25 | 0.80 | ||||||||
| Euro to CAD exchange rate = 1.1*1.25 | 1.3750 | ||||||||
| Ans a) | Calculate the gross margin in USD: ______ | ||||||||
| Local currency | Local currency Amount | Exchange rate | USD AMT | ||||||
| i | sales = | CAD | 45 | 0.80 | 36 | ||||
| Variable cost | |||||||||
| USD | 10 | 1.00 | 10 | ||||||
| EURO | 1.5 | 1.10 | 1.65 | ||||||
| CAD | 2 | 0.80 | 1.60 | ||||||
| ii | Total USD cost = | 13.25 | |||||||
| iii=i-ii | Gross margin in USD = | 22.75 | |||||||
| Ans b) | Calculate the gross margin in CAD….. | ||||||||
| Local currency | Local currency Amount | Exchange rate | USD AMT | ||||||
| i | sales = | CAD | 45 | 1.00 | 45 | ||||
| Variable cost | |||||||||
| USD | 10 | 1.25 | 12.5 | ||||||
| EURO | 1.5 | 1.38 | 2.0625 | ||||||
| CAD | 2 | 1.00 | 2.00 | ||||||
| ii | Total USD cost = | 16.5625 | |||||||
| iii=i-ii | Gross margin in CAD = | 28.4375 | |||||||
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