Question

Automatic Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1.250 per unit: variable cost = $470 per unit: fixed costs = $4.98 million; quantity = 88.000 units. Suppose the company believes all of its estimates are accurate only to within 21 percent. What values should the company use for the four variables given here when it performs its best-case and worst-case scenario analysis? (Do not round Intermediate calculations and enter your answers in dollars, not million, rounded to the nearest whole number, e.g., 1,234,587.) Scenario Unit Sales 88,000S Unit Variable Cost S 470 Fixed Costs $ 4.980,000 Base case 1.250 Best case Worst case

Answer 1

A B C 1 Scenario Unit Sales Unit Price Unit variable cost Fixed costs 2 Base case 88,000 $ 1,250 $ 470 $4,980,000 3 Best case 106,480 $ 1,513 $ 371 $3,934,200 4 Worst case 69,520 $ 988 $ 569 $6,025,800

A B C D Ε 1 Scenario Unit Sales Unit Price Unit variable costFixed costs 2 Base case 88000 1250 470 4980000 3 Best case =+B2*1.21 =+C2*1.21 =+D2*0.79 =+E2*0.79 4 Worst case =+B2*0.79 =+C2*0.79 =+D2*1.21 =+E2*1.21

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