# Business Homework Help - Exchange Rates watch

1. 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:
Costs:
• £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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