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Advanced Management Accounting Questions 168–172 (page: 20)

Updated On: 31-Jan-2026

SkillWeave Industries are focused on managing the risk of selling their cars to the region due to economic turmoil, and have now begun using funds from sales in the region to fund supplier purchases from that region to

reduce the risk from the volatile currency. However, SkillWeave want to go a step further and make the risk even less sizeable.

Which of the following is a method by which SkillWeave can operate in the market and transfer the risk of exchange rate exposure to another party?

  1. Invoice international sales in domestic currency
  2. Temporarily stop operating in that target market
  3. Arrange a forward foreign exchange rate contract agreeing to buy a given amount of the foreign currency in 3 months time for a fixed exchange rate based on current rates
  4. Put a sale on all vehicles stationed in the region to clear stock quickly

Answer(s): A



SDF makes cars. Demand for one of SDF's most popular models has declined because of a long-running television program. SDF's car is driven by a villainous character in the program and that has created such a negative association that sales have declined so significantly that SDF is planning to discontinue production.

Which of the following statements is correct? Select ALL that apply.

  1. Business risks can arise from unexpected events.
  2. The use of a product in a television program can create upside risks.
  3. SDF should have considered the possibility that sales of this car could be affected by public perception, even though the car's practical attributes are unchanged.
  4. SDF's board should accept full responsibility for permitting this to happen.
  5. SDF's sales department should have prevented the television production company from buying the car.

Answer(s): A,B,C



Which of the following statements is correct?

  1. Risk can be quantified and probabilities can be assigned reliably to the possible outcomes.
  2. Uncertainty cannot be quantified and probabilities can be assigned reliably to the possible outcomes.
  3. Risk cannot be quantified and probabilities cannot be assigned reliably to the possible outcomes.
  4. Uncertainty can be quantified and probabilities can be assigned reliably to the possible outcomes.

Answer(s): A



One aspect of life cycle costing is the recognition of the fact that during the design or development stage a large proportion of many products' life cycle costs are:

  1. determined
  2. wasted
  3. under absorbed
  4. amortised

Answer(s): A



CORRECT TEXT
Company TTM has the opportunity to invest $60,000 in a project. The project is anticipated to produce annual returns of $12,500 each year for 8 years. The cost of capital is 12%.

What is the net present value of the project? Give your answer to the nearest whole number.

  1. $2100

Answer(s): A



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