Adept NV is analyzing a proposed project.The company expects to sell 2,500 units,give or take 10%.The expected variable cost per unit is €8 and the expected fixed costs are €12,500.Cost estimates are considered accurate within a plus or minus 5% range.The depreciation expense is €4,000.The sale price is estimated at €16 a unit,give or take 2%.The company bases its sensitivity analysis on the expected case scenario.The company conducts a sensitivity analysis using a variable cost of €9.The total variable cost estimate will be:

Question

Quizplus · Accepted Answer

Using the expected case scenario, the variable cost per unit is €8, so the total variable cost estimate would be 2,500 units x €8 = €20,000.

However, in the sensitivity analysis, the variable cost per unit is €9. So the total variable cost estimate would be 2,500 units x €9 = €22,500.

Therefore, the best choice is B.

Adept NV Is Analyzing a Proposed Project