The Can-Do Co

question 16

Multiple Choice

The Can-Do Co. is analyzing a proposed project. The company expects to sell 12,000 units, give or take 4%. The expected variable cost per unit is $7 and the expected fixed cost is $36,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6% range. The depreciation expense is $30,000. The tax rate is 34%. The sale price is estimated at $14 a unit, give or take 5%. The company bases its sensitivity analysis on the expected case scenario.
-What is the operating cash flow for a sensitivity analysis using total fixed costs of $32,000?

• A)$14,520
• B)$16,520
• C)$22,000
• D)$44,520
• E)$52,000

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