A project has estimated sales of 2,600 units at $15.40 per unit; variable costs per unit of $6.79,± 3 percent; annual fixed costs of $17,500,± 3 percent; and depreciation of $2,850 per year.The company bases its sensitivity analysis on the expected scenario.If a sensitivity analysis is conducted using a variable cost of $7,what will be the total annual variable costs?
A)$18,746
B)$18,200
C)$16,625
D)$17,654
E)$21,185

Question

Quizplus · Accepted Answer

The total annual variable costs can be calculated by multiplying the variable cost per unit by the number of units. So, with a variable cost of $7 per unit and estimated sales of 2,600 units, the total annual variable costs would be 2,600 units * $7/unit = $18,200.

A Project Has Estimated Sales of 2,600 Units at $15