Precise Machinery is analyzing a proposed project. The company expects to sell 2,100 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, give or take 2 percent. What is the amount of the total costs per unit under the worst case scenario?
A)$548.58
B)$577.45
C)$604.16
D)$638.23
E)$640.25

Question

Quizplus · Accepted Answer

Total costs per unit_{worst case} = [($2,100 F1F1F1S1F1F1F10 0.95) (260 F1F1F1S1F1F1F10 1.04) + ($589,000 F1F1F1S1F1F1F10 1.04)]/(2,100 F1F1F1S1F1F1F10 0.95) = $577.45

Precise Machinery Is Analyzing a Proposed Project