The Alfonso Company Is Analyzing a Project with Expected Sales

question 403

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 sales revenue under the worst case scenario?

• A) $64,980
• B) $68,400
• C) $71,820
• D) $72,610
• E) $75,600

---

Definitions:

Statutory Depletion

A tax deduction allowing an owner to account for the reduction of a product's reserves.

Financial Reporting

The process of disclosing financial results and related information to stakeholders and the public, which includes balance sheets, income statements, and more.

Straight-Line Depreciation

A method of evenly distributing the cost of an asset over its useful life.