ABSTRACT
This chapter begins by looking at home market costs. In Peterborough Tubes, where royalty payments increased immediately by the full amount of devaluation, production, sales and therefore royalties were much easier to predict. Where devaluation decisions implied no increase in exports, the firm needed only information about the way total costs would be affected. The effect of devaluation on marginal costs was important only for those firms taking marketing decisions intended to increase exports beyond the existing level, for example, decisions to reduce foreign-currency prices. As so often seems to happen with inventories, our firms probably paid too much attention to what their accounting systems told them. In some of our firms, the cost information on which they based their devaluation decisions fell short of the ideal, one might be tempted to criticise the internal information they used in their devaluation decisions, even though all but four of them had accounting systems that worked in terms of contribution.
