The Adept Co. 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.
-What is the sales revenue under the optimistic case scenario?

Question

Quizplus · Accepted Answer

To calculate sales revenue under the optimistic case scenario, we need to take the upper limit of the expected number of units sold and the upper limit of the sale price per unit:

Upper limit of units sold = 2,500 + (10% of 2,500) = 2,750
Upper limit of sale price per unit = $16 + (2% of $16) = $16.32

Sales revenue under the optimistic case scenario = 2,750 x $16.32 = $44,880

The best choice(s) cannot be determined without more information about the company's goals and constraints. This calculation only gives information about the potential sales revenue under specific scenarios. Therefore, the answer is D with no explanation needed.