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Apple has a wholly subsidiary in Germany, whose manager is being evaluated based on the difference between actual and budgeted profit in US dollars (USD)
Apple has a wholly subsidiary in Germany, whose manager is being evaluated based on the difference between actual and budgeted profit in US dollars (USD) and foreign exchange rates are used to establish budgets and track actual performance. Current year actual and projected exchange rates between the USD and Euro () are as follows:
Actual at time of budget preparation (TOB) rate | USD 0.89 per Euro 1 |
Projected ending at time of budget preparation rate (Proj TOB) | USD 0.80 per Euro 1 |
Actual at end of period rate (EOP) | USD 0.85 Per Euro 1 |
- Identify the best combinations in terms of the exchange rates listed above that the parent company can use to evaluate the performance (i.e., budgeted Vs. Actual performance) of the investment (project). Why
- Identify the best combinations in terms of exchange rates the parent company can use to evaluate the performance (i.e., budgeted Vs. Actual performance) of the foreign investments (project) manager. Why?
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