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bogdanovich [222]
3 years ago
15

Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $2,900 per unit; variable cost

s = $580 per unit; fixed costs = $5.2 million; quantity = 88,000 units. Suppose the company believes all of its estimates are accurate only to within ±15 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? What about the worst-case scenario?
Business
1 answer:
Sloan [31]3 years ago
5 0

Answer:

in its best case scenario:

selling price = $2,900 + 15% = $3,335 per unit

variable costs = $580 - 15% = $493 per unit

fixed costs = $5.2 million - 15% = $4.42 million

quantity = 88,000 + 15%  = 101,200 units

estimated profits in best case scenario = $337,502,000 - $49,891,600 - $4,420,000 = $283,190,400

in its worst case scenario:

selling price = $2,900 - 15% = $2,465 per unit

variable costs = $580 + 15% = $667 per unit

fixed costs = $5.2 million + 15% = $5.98 million

quantity = 88,000 - 15%  = 74,800 units

estimated profits in best case scenario = $184,382,000 - $49,891,600 - $5,980,000 = $128,510,400

The firm is still profitable because the contribution margin is huge even in the worst case scenario. In he best case scenario the break even point is 1,556 units, while the break even point in the worst case scenario is 3,326 units. It's a very low break even point considering total expected sales.

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3 years ago
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mrs_skeptik [129]

Answer:

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Explanation:

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6 0
3 years ago
In the context of Web marketing, the _____ is computed by dividing the number of clicks an ad gets by the total impressions boug
s2008m [1.1K]

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5 0
2 years ago
Wisdom Toys has budgeted sales and production over the next quarter as follows: Unit Sales Production September 43,000 44,400 Oc
baherus [9]

Answer:

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7 0
3 years ago
When a market’s annual growth rate falls below 10 percent, a star will become a dog if it still has the largest market share?
mezya [45]
That statement is false

according to <span>IX Boston Consulting Group Model, a star will became a<em> cash cow</em> </span><span>if it still has the largest market share under this circumstances.
This means that the company still making enough cash for its employees and still enjoy a pretty high-profit margin.

</span>
3 0
3 years ago
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