As yen-denominated costs become a larger portion of Ford's total costs, a dollar appreciation results in a smaller increase in the yen-denominated cost of a Ford auto than occurs when all input costs are dollar denominated.

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This is because when yen-denominated costs become a larger portion of Ford's total costs, it means that a smaller portion of Ford's costs are denominated in dollars, thus the dollar appreciation has a smaller impact on the yen-denominated cost of a Ford auto.

As Yen-Denominated Costs Become a Larger Portion of Ford's Total