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.
