1.

Wilsons Market is reviewing a project with sales of 6,200 units plus or minus 2 percent at a sales price of $29 plus or minus 1 percent per unit. The expected variable cost per unit is $11 plus or minus 3 percent and the expected fixed costs are $87,000plus or minus 1 percent. The depreciation expense is $68,000 and the tax rate is 35 percent. What is the net income under the worst-case scenario?

- A $8,578.42

- B $32,674.93

C $15,846.67

D $28,704.11

E $4,696.18

2.

The CFO of Edward's Food Distributors is continually receiving capital funding requests from its division managers. These requests are seeking funding for positive net present value projects. The CFO continues to deny all funding requests due to the financial situation of the company. Apparently, the company is:

A) Operating at the accounting break-even point.

B) Operating at the financial break-even point.

C) Facing hard rationing.

D) Operating with zero leverage

E) Operating at maximum capacity

3.

A project has the following estimated data: price = $52 per unit; variable costs = $27.56 per unit; fixed costs = $7,700; required return = 11 percent; initial investment = $10,000; life = three years. Ignore the effect of taxes.

Required:

(a)	What is the accounting break-even quantity? (Do not round your intermediate calculations.)

(b)	What is the cash break-even quantity? (Do not round your intermediate calculations.)

(c)	What is the financial break-even quantity? (Do not round your intermediate calculations.)

(d)	What is the degree of operating leverage at the financial break-even level of output? (Do not round your intermediate calculations.)