Question

Precise Machinery is analyzing a proposed project. The company expects to sell 3,500 units, give or take 5 percent. The expected variable cost per unit is $260 and the expected fixed costs are $589,000. Cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $129,000. The sales price is estimated at $750 per unit, plus or minus 3 percent. What is the sales revenue under the worst case scenario

Answer 1

Answer:

Sales revenue= $2,418,937.5

Explanation:

Giving the following information:

The company expects to sell 3,500 units, give or take 5 percent.

The sales price is estimated at $750 per unit, plus or minus 3 percent.

The sales revenue worst-case scenario is the one with the lowest units sold and the lowest selling price per unit.

Units sold= 3,500*0.95= 3,325

Selling price= 750*0.97= $727.5

Sales revenue= 3,325*727.5= $2,418,937.5