Southern Goods Is Analyzing a Proposed Project Using Standard Sensitivity

question 3

Multiple Choice

Southern Goods is analyzing a proposed project using standard sensitivity analysis.The company expects to sell 4,500 units,±11 percent.The expected variable cost per unit is $13 and the expected fixed costs are $12,000.Cost estimates are considered accurate within a ± 5 percent range.The depreciation expense is $5,000.The sale price is estimated at $22 a unit,±2 percent.
If the company conducts a sensitivity analysis using a variable cost of $12,what will the total variable cost estimate be?

• A)$59,940
• B)$53,500
• C)$53,625
• D)$54,000
• E)$48,060

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