New Foods Is Analyzing a Proposed Project with Expected Sales

question 9

Multiple Choice

New Foods is analyzing a proposed project with expected sales of 8,700 units,±4 percent.The expected variable cost per unit is $26 and the expected fixed costs are $49,000.Cost estimates are considered accurate within a range of ±1 percent.The depreciation expense is $18,300.The sale price is estimated at $52 a unit,±3 percent.If the company conducts a sensitivity analysis using a variable cost of $28,what will be the total variable cost estimate?

• A)$233,856
• B)$253,344
• C)$253,625
• D)$243,600
• E)$248,060

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Definitions:

Stock Worth

The current market value of a company's shares.

Constant Rate

A fixed rate applied over a period of time, often used in the context of growth rates or interest rates.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shareholders typically receive dividends before common shareholders and have priority in the event of a liquidation.

Dividend Per Share

It refers to the total dividends declared by a company for each share of its outstanding shares.