Question

If a firm's variable cost per unit estimate used in its base-case analysis is $50 per unit and they anticipate the upper and lower bounds to be ± 10 percent, what is the "worst case" for variable cost per unit?

Answer 1

Based on the base-case analysis of the firm's variable cost and the upper bounds anticipated, the worst case for variable cost per unit is $52.50.

What is the worst case for variable costs?

The worst case scenario for expenses would be a situation where they are higher instead of lower.

This means that the upper bound of the variable cost will be applied to find the worst case scenario:

= Base case analysis amount x (1 + upper bound)

= 50 x (1 + 5%)

= $52.50.

Find out more on variable costs at brainly.com/question/5965421.