e Assignment Questions:

1. Recalculate the income statement in Exhibit 1 using the post-Brexit exchange rate of 1.00 = 1.16 assuming that there are no changes to the prices charged by the company to U.K. buyers. Assume that fixed costs remain fixed and that variable costs vary proportionally to volume or quantity sold. Calculate the profit in both pounds and euros.

2. Recalculate the income statement in Exhibit 1 using the post-Brexit exchange rate of 1.00 = 1.16 assuming that there the U.K. subsidiary prices increases its price to U.K. buyers to 235 per unit. Assume that fixed costs remain fixed and that variable costs vary proportionally to volume or quantity sold. Assume that the U.K. purchaser consumer behavior is somewhat elastic and that market research suggests their elasticity = 1.1 Using the simple price elasticity formula calculate the profit in both pounds and euros.

3. Recalculate the income statement in Exhibit 1 using the post-Brexit exchange rate of 1.00 = 1.16 assuming that there the U.K. subsidiary prices increases its price to U.K. buyers to 235 per unit. Assume that fixed costs remain fixed and that variable costs vary proportionally to volume or quantity sold. Assume that the U.K. purchaser consumer behavior is somewhat elastic and that market research suggests their elasticity = .8 Using the simple price elasticity formula calculate the profit in both pounds and euros.

4. Which of the three options should Montague choose? What is the perspective of the Italian headquarters?costs remain fixed and that variable costs vary proportionally to volume or quantity sold. Assume that the U.K. purchaser consumer behavior is somewhat elastic and that market research suggests their elasticity = .8 Using the simple price elasticity formula calculate the profit in both pounds and euros.

4. Which of the three options should Montague choose? What is the perspective of the Italian headquarters?

EXHIBIT 1: PRE-BREXIT INCOME STATEMENT (ANNUALIZED), ASSUMING E1.00 = 61.36 Souroe: Company dotumenta