The Alfonso Company Is Analyzing a Project with Expected Sales

question 203

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 contribution margin under the best case scenario?

• A) $9.00
• B) $9.18
• C) $9.90
• D) $10.08
• E) $10.26

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