Advanced Accounting - Standalone book
Advanced Accounting - Standalone book
12th Edition
ISBN: 9780077862220
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Chapter 2, Problem 8P
To determine

Identify the appropriate answer for the given statement from the given choices.

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A proposed project has estimated sale units of 3,200, give or take 3 percent. The expected variable cost per unit is $9.45 and the expected fixed costs are $21,800. Cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $3,750. The sale price is estimated at $14.20 a unit, give or take 2 percent. The company bases its sensitivity analysis on the expected case scenario. If a sensitivity analysis is conducted using a variable cost estimate of $9.80, what will be the total annual variable costs?
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