The Adept Co

question 54

Multiple Choice

The Adept Co. is analyzing a proposed project. The company expects to sell 2,500 units,give or take 10%. The expected variable cost per unit is $8 and the expected fixed costs are $12,500. Cost estimates are considered accurate within a plus or minus 5% range. The depreciation expense is $4,000. The sale price is estimated at $16 a unit,give or take 2%. The company bases its sensitivity analysis on the expected case scenario. The company is conducting a sensitivity analysis on the sales price using a sales price estimate of $17. Using this value,the earnings before interest and taxes will be:

• A) $4,000
• B) $6,000
• C) $8,500
• D) $10,000
• E) $18,500

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Definitions:

Industrial Regulation

The government rules and regulations designed to control the behavior of firms within an industry to protect public interest.

Interstate Commerce Act

A United States federal law designed to regulate the railroad industry and its monopolistic practices by enforcing fair rates and supervising railroads' activities.

Federal Government

The national government of a federal country that shares sovereignty with its states or provinces, responsible for national defense, foreign policy, and interstate regulations.