The Adept Co

question 8

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.
-What is the sales revenue under the optimistic case scenario?

• A)$40,000
• B)$43,120
• C)$44,000
• D)$44,880
• E)$48,400

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Definitions:

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean, widely used to quantify the volatility of financial instruments.

Simulation Analyses

A statistical method that attempts to predict the outcome of a decision or investment by representing possible scenarios and their impacts.

Incremental Cash Flows

The additional cash flows from operations that a business generates from taking on a new project.

Marketing Study

An analysis or research conducted to gain insights into and understand potential market trends, consumer behaviors, or the effectiveness of marketing strategies.