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ABC Co. has compiled these estimates for a new 1-year project: Sales of 1,650 units, ±...

ABC Co. has compiled these estimates for a new 1-year project: Sales of 1,650 units, ± 5 percent; sales price of $17 a unit, ± 1 percent; variable costs per unit of $7.49, ± 3 percent; fixed costs of $3,800, ± 1 percent; and depreciation of $2,200. The company bases its sensitivity analysis on the expected case scenario. If the company conducts a sensitivity analysis at a sales price of $16.25, what will be the earnings before interest and taxes? Multiple Choice $8,530 $8,709 $8,454 $8,265 $8,510

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Answer #1

$8,454

Sales=Units*Sale price 26812.5
Variable cost= Units*VC per unit 12358.5
Fixed costs 3800
Depreciation 2200
EBIT 8454

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