Seemah Corporation is based in Malaysia. It sells machinery in Vietnam. Annual sales are

10,000 units at a price of the Vietnamese dong (VND) 27.5 million each. Direct costs are 70% of

Malaysian sales price. VND is currently at VND5500/MYR. Because of market shocks, the

VND depreciates to 6,100/MYR. The firm has 2 options below. Examine both operating

exposures would be faced by this firm in MYR and recommend the better strategy.

The 2 options are:

(i) the firm maintains the same dong price, in which the sales units do not change.

(ii) if the firm increases the dong price, maintains the same ringgit price in Malaysia, in

which unit sales decline by 12 percent.