The Alfonso Company Is Analyzing a Project with Expected Sales

question 37

Multiple Choice

The Alfonso Company is analyzing a project with expected sales of 4,000 units, give or take 5 percent. The expected variable cost per unit is $9 and the expected total fixed costs are $17,000. Cost estimates are considered accurate within a plus or minus 2 percent range. The depreciation expense is $3,000. The sale price is estimated at $18 a unit, give or take 5 percent. Sensitivity analysis is based on the most likely scenario.

What is the amount of the fixed cost per unit under the base case scenario?

• A) $3.60
• B) $3.80
• C) $4.00
• D) $4.10
• E) $4.25

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Definitions:

Telling

A leadership behavior characterized by giving clear instructions and guidance to followers, informing them exactly how and when to complete the task.

Directive Approach

A leadership style in which decisions and policies are made by the leader and directly communicated to subordinates, with little input from them.

Supportive

Providing assistance, encouragement, or comfort to others, often in times of need or to help achieve a goal.

Achievement-Oriented

A personal characteristic or attitude where an individual is driven by goals and the pursuit of success.