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25 January, 02:20

ABC Co. expects to sell 2,200 units, give or take 10 percent. The expected variable cost per unit is $8.43 and the expected fixed costs are $9,500. Cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $4,000. The sale price is estimated at $16 a unit, give or take 2 percent. The company bases its sensitivity analysis on the expected case scenario. If the company conducts a sensitivity analysis on the sales price using a price estimate of $16.25, what will be the earnings before interest and taxes

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  1. 25 January, 03:55
    0
    Earning Before Interest and Taxes $3,704

    Explanation:

    Sales (2,200 * 16.25) 35,750

    Less: Variable Costs (2,200 * 8.43) (18,546)

    Contribution Margin 17,204

    Less: Fixed Cost (9,500)

    Depreciation Expense (4,000)

    Earning Before Interest and Taxes $3,704
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Home » Business » ABC Co. expects to sell 2,200 units, give or take 10 percent. The expected variable cost per unit is $8.43 and the expected fixed costs are $9,500. Cost estimates are considered accurate within a plus or minus 5 percent range.
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