The Alfonso Company Is Analyzing a Project with Expected Sales

question 289

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 total variable costs under the best case scenario?

• A) $35,280
• B) $36,720
• C) $37,044
• D) $37,918
• E) $38,556

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Definitions:

Range

The difference between the highest and lowest values in a set of numbers, indicating the spread or dispersion of the dataset.

Empirical Rule

The empirical rule, also known as the 68-95-99.7 rule, states that for a normal distribution, approximately 68% of the data falls within one standard deviation of the mean, 95% within two, and 99.7% within three.

Normal Curve

A symmetrical, bell-shaped curve that represents the distribution of values, deviations, or probabilities for a set of data in which most measurements cluster around the mean.

Bell-Shaped

A bell-shaped curve is a graph of a distribution that resembles the shape of a bell, typically representing a normal distribution in which the bulk of the values lie towards the center and taper off symmetrically towards the extremes.