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Suppose that the dollar strengthens versus the British Pound. Complete the table below using a new rate of exchange whereby the $USD appreciates versus the

Suppose that the dollar strengthens versus the British Pound. Complete the table below using a new rate of exchange whereby the $USD appreciates versus the British Pound .
Scenario 2 Mobile Select
Gross Sales in Pounds ()
Less: Commission Paid to Pogue ()1
Equals: Net Sales ()
Current Exchange Rate $1=0.91.0.91
Sales in $US Dollars2
Less: Production Costs in $US Dollars3
Equals: Earnings Before Tax in $US Dollars
1 Pogues commission as a decimal multiplied by Pogues Gross Sales
2 The conversion of to $USD at the exchange rate in the table
3 Gross Sales in $USD multiplied by the stated production cost, 70%
3. With the dollar strength versus the British Pound, what happens if Pogues sales are 1.8 million? Complete the table below using a new rate of exchange from question 2 and Gross
Sales are 1,800,000.
Scenario 3 Mobile Select
Gross Sales in Pounds ()1,800,000
Less: Commission Paid to Pogue ()1
Equals: Net Sales ()
Current Exchange Rate $1=0.91.0.91
Sales in $US Dollars2
Less: Production Costs in $US Dollars3
Equals: Earnings Before Tax in $US Dollars
1 Pogues commission as a decimal multiplied by Pogues Gross Sales
2 The conversion of to $USD at the exchange rate in the table
3 Gross Sales in $USD multiplied by the stated production cost, 70%
4. Compare the results from Scenarios 1 to 3. What happens to Mobile Select if the dollar strengthens against the pound? What is the effect on Mobile Select of a stronger dollar and a lower level of sales in the UK provided by Pogue?

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