Automatic Transmissions, Inc., has the following estimates for its new gear asse

Question

Automatic Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,150 per unit; variable cost = $370 per unit; fixed costs = $4.88 million; quantity = 78,000 units. Suppose the company believes all of its estimates are accurate only to within ± 14 percent.

What values should the company use for the four variables given here when it performs its best-case and worst-case scenario analysis? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars. Round your answers to the nearest whole dollar amount (e.g.,1,234,567).)

Automatic Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,150 per unit; variable cost = $370 per unit; fixed costs = $4.88 million; quantity = 78,000 units. Suppose the company believes all of its estimates are accurate only to within ± 14 percent.

Explanation / Answer

Solution -

To solve this we need to just increase or decrease the variables with 14% ensuring that we give the correct effect as increase in Sales activities would be favourable however increase in cost activities would be unfavourable & Vice Versa - All increase and decrease is 14% as best or worst as estimates are accurate only to within

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