Question

The Adept Co. is analyzing a proposed project. The company expects to sell 3,500 units, give or take 10 percent. The expected variable cost per unit is $7 and the expected fixed costs are $12,500. Cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $6,000. The sale price is estimated at $15 a unit, give or take 2 percent. The company bases their sensitivity analysis on the expected case scenario. What is the sales revenue under the optimistic case scenario?

a. $54,880.
b. $50,000.
c. $58,905.
d. $53,120.
e. $54,000.

Answer 1

c. $58,905.

Step-by-step explanation:

The computation of the sales revenue is shown below:

optimistic scenario revenue = optimistic unit sold × optimistic price

where,

optimistic unit sold = 3500 × 110%

= $3,850

optimistic price = 15 × 102%

= 15.3

So, the Optimistic revenue is

= 3850 × 15.3

= $58,905

Hence, the option c is correct