Question

Question 1 2 pts The CFO of Brain Capital Co is cautious when deciding whether to undertake a new potential project and therefore, she projects an optimistic, a realistic, and the most pessimistic outcomes that can happen. Which type of analysis is she using? O Sensitivity Analysis Scenario Analysis Rationing Analysis Simulation Testing Break-Even Analysis Question 2 3 pts At the accounting break-even point, Mountains and Lakes Co. sells 22,940 boots at a price of $19 each. The depreciation is $67,000 and the variable cost per unit is $6. How much are the fixed costs at this level of production? 459040 332207 532093 O 347990 473571

Answer 1

1-	Senario analysis	it is used to analyse the sensitivity of the project under different scenarios like optimist, realistic and most perssimist situation
2-
Accounting break even point in sales			22940
contribution margin per unit = selling price -variable cost	19-6		13
Break even point in units = fixed cost/contribution margin per unit	22940 =( fixed cost+depreciation)/contribution margin per unit	fixed cost+67000 = 22940*13	Fixed cost = (22940*13)-67000	231220
Fixed cost			Fixed cost = (22940*13)-67000
3-
Units to be sold under best scenario	Units to be sold in normal course*(1+growth rate)	8700*1.05	9135
selling price in best case senario	selling price in normal course*(1+growth rate)	69*1.02	70.38
variable cost in best scenario	variable cost in normal scenario*(1+growth rate) growth rate = -3%	12*0.97	11.64
fixed cost in best case scenario	fixed cost in normal scenario*(1+growth rate) = growth rate =-2%	280000*0.98	274400
Sales in best case scenario = units to be sold*selling price	9135*70.38		642921.3
variable cost = units to be sold*variable cost per unit			106331.4
fixed cost in best scenario			274400
Annual depreciation			68000
operating profit			194189.9
less tax-41% = 194189.9*41%			79617.86
after tax profit			114572
add depreciation			68000
net operating cash flow			182572