CanDo SA is analyzing a proposed project.The company expects to sell 12,000 units,give or take 4%.The expected variable cost per unit is €7 and the expected fixed cost is €36,000.The fixed and variable cost estimates are considered accurate within a plus or minus 6% range.The depreciation expense is €30,000.The tax rate is 34%.The sale price is estimated at €14 a unit,give or take 5%.The company bases its sensitivity analysis on the expected case scenario.What is the earnings before interest and taxes under the expected case scenario?

Question

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The expected sales are 12,000 units, with a possible variation of 4%. The expected variable cost per unit is €7, with a possible variation of 6%. The expected fixed cost is €36,000, with a possible variation of 6%. The depreciation expense is €30,000. The tax rate is 34%. The sale price is estimated at €14 a unit, with a possible variation of 5%.The expected revenue is 12,000 units * €14 per unit = €168,000. The expected variable cost is 12,000 units * €7 per unit = €84,000. The expected fixed cost is €36,000. The expected depreciation expense is €30,000. The expected earnings before interest and taxes (EBIT) is €168,000 - €84,000 - €36,000 - €30,000 = €18,000.

CanDo SA Is Analyzing a Proposed Project