Miller Mfg. is analyzing a proposed project. The company expects to sell 13,000
ID: 2692822 • Letter: M
Question
Miller Mfg. is analyzing a proposed project. The company expects to sell 13,000 units, give or take 4 percent. The expected variable cost per unit is $6.00 and the expected fixed cost is $34,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6 percent range. The depreciation expense is $27,000. The tax rate is 34 percent. The sale price is estimated at $12.00 a unit, give or take 3 percent. What is the earnings before interest and taxes under the base case scenario? $17,000 $31,894 $24,000 $51,000 $44,000Explanation / Answer
Miller Mfg. is analyzing a proposed project. The company expects to sell 13,000 units, give or take 4 percent. The expected variable cost per unit is $6.00 and the expected fixed cost is $34,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6 percent range. The depreciation expense is $27,000. The tax rate is 34 percent. The sale price is estimated at $12.00 a unit, give or take 3 percent.
What is the earnings before interest and taxes under the base case scenario?
$17,000
$31,894
$24,000
$51,000
$44,000
UNITS =============13,000 units
SELLING PRICE= $12.00
variable cost per unit is= $6.00
CONTRIBUTION FPER= $6.00