A US Company Has a Subsidiary Located in Great Britain

A U.S. company has a subsidiary located in Great Britain. Information for the subsidiary for the year ended December 31, 2006, is as follows:
$\begin{array}{ll}&\text { British pound }\\\text { Gross profit margin } & 40 \% \\\text { Inventory } & 2,000\\\\&\text { Exchange Rate }\\\text { Balance sheet date } & 1 \text { pound }=\$ 1.6 \\\text { Average exchange rate } & 1 \text { pound }=\$ 1.5 \\\text { Historical rate } & 1 \text { pound }=\$ 1.4\end{array}$

-If sales were 3,000 in British pounds for the fiscal year and the temporal method was used, what would this be in U.S. dollars?

A) $4,800
B) $4,500
C) $4,200
D) $4,000

Correct Answer:

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