The Meldrum Co

Multiple Choice

The Meldrum Co. is analyzing a proposed project. The company expects to sell 3,000 units,give or take 15%. 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 $18 a unit,give or take 2%. The company bases its sensitivity analysis on the expected case scenario. What is the amount of the fixed cost per unit under the pessimistic case scenario?

A) $4.17
B) $4.66
C) $5.15
D) $5.35
E) $6.02