The company is conducting a sensitivity analysis on the sales price using a sales price estimate of $23. What are the earnings before interest and taxes?
A) $38,000
B) $44,000
C) $50,000
D) $59,500
E) $65,000

Question

Quizplus · Accepted Answer

The correct answer is A because the earnings before interest and taxes is $38,000. This is calculated by taking the sales price of $23 and multiplying it by the number of units sold, which is 2,000. This gives us a total sales revenue of $46,000. We then subtract the cost of goods sold, which is $8,000, to get the earnings before interest and taxes of $38,000.

The Company Is Conducting a Sensitivity Analysis on the Sales