The Quick Producers Co

Multiple Choice

The Quick Producers Co. is analyzing a proposed project. The company expects to sell 10,000 units, give or take 5 percent. The expected variable cost per unit is $6 and the expected fixed cost is $29,000. The fixed and variable cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $25,000. The tax rate is 34 percent. The sale price is estimated at $13 a unit, give or take 6 percent.

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

A) $840
B) $1,650
C) $2,810
D) $5,090
E) $8,530