Scenario of Costs of Manufacturing Part

The scenario described in Question 10 indicates that the exchange rate at the time of placing the order would be US$1: 109 Japanese yen. The scenario indicates further that the exchange rate will be unchanged when Suzu Manufacturing Company must pay for the part.

An exchange rate of US$1: 109 Japanese yen means that one Japanese yen will buy US$0.00917 [1 United States dollar divided by 109 Japanese yen = US$0.00917]. Therefore, one Japanese yen will buy less than one United States cent. Therefore, for Suzu Manufacturing Company to buy one unit of the required part for a cost plus freight price of US$19, the company would be required to convert 2071 Japanese yen or 2071.97 Japanese yen into United States dollars. There are two ways to calculate this exchange, as follows:

US$19 times 109 Japanese yen = 2071 Japanese yen, or

US$19 divided by 0.00917 Japanese yen = 2071.97 Japanese yen

There is no question under the scenario described in Question 10: Suzu Manufacturing Company should buy the part from the United States. The price of the part pr

. . .
375 Japanese yen into United States dollars; calculated as follows: US$19 times 125 Japanese yen = 2375 Japanese yen. There is no question under the scenario described in Question 10: Suzu Manufacturing Company should buy the part from the United States. The price of the part produced in the United States stated in Japanese currency is 2375 Japanese yen. This price compares to a price from the domestic manufacturer in Japan of 2450 Japanese yen. This relationship is illustrated in the Question 11 Chart (on the following page).
Question 12 A variety of factors affects the international exchange rate of a currency. There are four major types of market conditions that may be expected to affect foreign currency exchange rates under relevant conditions: (1) changes in the value of exports and imports; (2) differential rates of inflation; (3) changes in domestic interest rates; and (4) changes in foreign interest rates (Yarbrough & Yarbrough, 2000). If the value of a countryÆs exports increases relative to the value of its imports, the value of the countryÆs currency (other things being equal) tends to increase in the foreign currency exchange markets. Alternatively, if the value of imports increases relative to the value of expo
. . .

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Approximate Word count = 1511
Approximate Pages = 6 (250 words per page)

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