Idris Hydraulics of Kuala Lumpur, Malaysia, purchases all of its hydraulic drills from manufacturers in Thailand.

The company has recently completed a corporatewide initiative in six sigma/lean manufacturing.

Completed oil field hydraulic system costs were reduced 5% over a one-year period from RM900,000 to RM855,000. The company is now worried that all the hydraulic drills that goes into the systems (making up 30% of their total costs) will be hit by an increasingly stronger Thai baht due to the robust Thai economy. If the current exchange rate is THB7.18/MYR, how would a 14% revaluation of the Thai baht against the Malaysian ringgit impact total systems costs?

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(thousands of US$) Europe 2001 Sales ($) Mattel's Global Sales 2002 Sales ($) 2003 Sales ($) $933,450 $1,126,177 $1,356,131 Latin America 471,301 466,349 462,167 2004 Sales ($) $1,410,525 524,481 Canada 155,791 161,469 185,831 197,655 Asia Pacific 119,749 136,944 171,580 203,575 Total International $1,680,291 $1,890,939 $2,175,709 $2,336,236 United States 3,392,284 3,422,405 3,203,814 3,209,862 Sales Adjustments (384,651) (428,004) (419,423) (443,312) Total Net Sales $4,687,924 $4,885,340 $4,960,100 $5,102,786 Impact of Change in Currency Rates Region Europe 2001-2002 2002-2003 2003-2004 7.0% 15.0% 8.0% Latin America Canada Asia Pacific -9.0% -6.0% -2.0% 0.0% 11.0% 5.0% 3.0% 13.0% 6.0%