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    Hi! I have a business exam coming up soon and I really need help on this question!!

    A business has the following cost and revenue information during one month:
    • £10 000 - raw materials imported from the USA
    • £ 7 000 - raw materials from the UK
    • £11 000 - fixed costs

    Revenue:• £39 000In this month the exchange rate between the pound and the dollar was £1 = $1.5

    [I got the profit to be £11000]

    In the next month the business imports the same amount of raw materials from theUSA. The exchange rate has changed to £1 = $1.60. Assuming all other data remains the same, what effect does this change have on theprofit level? Select one answer: The profit level will:
    A) decrease by £1 350
    B) remain the same
    C) increase by £625
    D) increase by £1 600

    It would mean a lot if you could explain each stage of working out.
    Thank you so much!
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Updated: January 4, 2016
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