Webster United Is Considering Adding a New Product to Their

question 378

Multiple Choice

Webster United is considering adding a new product to their lineup. The company expects to sell 15,000 units, give or take 3 percent, of this item. The expected variable cost per unit is $12 and the expected total fixed cost is $21,000. The fixed and variable cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $22,000. The tax rate is 35 percent. The sale price is estimated at $15 a unit, give or take 2 percent.

What is the earnings before interest and taxes under the base case scenario?

• A) $1,860
• B) $2,000
• C) $2,400
• D) $2,640
• E) $2,850

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Definitions:

Part-Time

Part-Time describes employment with fewer hours per week than a full-time job, often offering limited benefits and flexibility.

Earnings

The amount of money that a company makes from its activities, often reported as profit on a financial statement.

Restaurant

A business establishment where meals or refreshments may be purchased and consumed by patrons.

Weekdays

The days of the week excluding the weekend; typically refers to Monday through Friday.