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:

Incentive Plan

A program designed to motivate and reward employees' performance by offering benefits, bonuses, or compensations.

Team-oriented

A focus or emphasis on working collaboratively in groups rather than individually for better outcomes.

Work Environment

The setting, conditions, and culture that employees experience in their place of employment.

Positive Reinforcement

The act of encouraging a desired behavior by offering a reward or positive outcome when the behavior is performed.