The Franklin Co

Multiple Choice

The Franklin Co. is analyzing a proposed project. The company expects to sell 3,500 units, give or take 15 percent. The expected variable cost per unit is $6 and the expected fixed costs are $15,500. Cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $6,000. The sales price is estimated at $21 a unit, give or take 3 percent. The company bases their sensitivity analysis on the base case scenario

What is the amount of the fixed cost per unit under the best case scenario?

A) $3.47
B) $3.66
C) $3.85
D) $4.21
E) $4.43