When a foreign subsidiary has a net liability exposure to foreign currency risk, and the foreign currency strengthens relative to the parent's presentation currency, it will result in a Both a positive and' negative translation adjustment. Negative translation adjustment. Neither a positive or negative translation adjustment. Positive translation adjustment.

The profit is higher when there is increase in sales price by 10% than when the Variable Cost is reduced to 55% of sales.

Explanation:

Sales price per unit = (400,000 / 5,000)

Sales price per unit = $80

Sales (5000 x 80) =         400000

Less Variable Cost           240000

Contribution Margin         160000

Less; Fixed Cost               90000

Profit                                 70,000

Management Consideration 1

When we Increase price by 10%

Increase selling price = 80 + 10/100 * 80

=$68

Sales (5000 x 68) =         440000

Less Variable Cost           240000

Contribution Margin         200000

Less; Fixed Cost               90000

Profit                                 110,000

Management Consideration 2

When Variable Cost is reduced to 55% of sales

New Variable cost = 80 * 55/100

=$44

Sales (5000 x 68) =                             400000

Less Variable Cost (44 * 5000)          220000

Contribution Margin                            180000

Less; Fixed Cost                                   90000

Profit                                                   900,000

Conclusion

The profit is higher when there is increase in sales price by 10% than when the Variable Cost is reduced to 55% of sales.