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 The conclusion that: 

6. the pound was thus overvalued against the dollar by 28%,

is a contentious one. This figure of $1.56 to £1 rather than the actual exchange rate of $2 to £1 merely reflects several possibble factors, including facts like the USA is a bigger market than that of the United Kingdom, leading to possibly more competition, therefore a cheaper supply of some items, such as the most expensive one (presumably) the beef patty, whereas in fact the largest profit made is probably on the hamberger bun, which should lead to a slightly increased profit margin on that item to improve profitability. It is possible that labour, (at minimum rates- the purpose of this exercise being an accurate comparison of labour rates) is the biggest single item.

Having a higher exchange rate than the USA (and most beef producing countries) would mean that the beef would posssibly cost more, because with labour costing (say £10 per hour in the UK, and $10 in the USA), and say $14 in New Zealand, the export price for meat may be $20 kg in New Zealand, reflecting the price offered in the UK (£10), and therefore being forced up for local New Zealand consumers to reflect the best price available- (actually it would probably be only 50% of this for McDonalds, representing their purchasing power).

Oil, being paid for in USA dollars would be slightly cheaper in the UK, (compared to wage rates), and represent a slight saving on transport. However

The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries. It "seeks to make exchange-rate theory a bit more digestible".^[1]

The index takes its name from the Big Mac, a hamburger sold at McDonald's restaurants.