Webster United Is Considering Adding a New Product to Their

Multiple Choice

Webster United is considering adding a new product to their lineup. The company expects to sell 15,000 units, give or take 3 percent, of this item. The expected variable cost per unit is $12 and the expected total fixed cost is $21,000. The fixed and variable cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $22,000. The tax rate is 35 percent. The sale price is estimated at $15 a unit, give or take 2 percent.

What is the earnings before interest and taxes under the base case scenario?

A) $1,860
B) $2,000
C) $2,400
D) $2,640
E) $2,850