The Can-Do Co

question 12

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 contribution margin for a sensitivity analysis using a variable cost per unit of $8?

• A)$3
• B)$4
• C)$5
• D)$6
• E)$7

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Definitions:

Nonlinear

Referring to a relationship or equation that does not form a straight line when graphed, often indicating a more complex relationship between variables.

Negative

In mathematics, a negative number is a real number that is less than zero.

Strong

describes a high degree of intensity, validity, or force.

Weight (Ounces)

A measurement of mass using the imperial unit of ounces, commonly used in the United States to measure smaller weights.