Lester Machinery is analyzing a proposed project. The company expects to sell 2,

Question

Lester 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, plus or minus 2 percent. What is the sales revenue under the worst case scenario?
Answer

$1,686,825

$1,496,250

$1,466,325

$1,543,500

$1,620,675

Explanation / Answer

No of units in worst scenario =2,100 *.95 Sales price in worst scenario = $750 *.98 sales revenue under the worst case scenario = (2,100 *.95 )*$750 *.98 =1466325 Answer = $1,466,325

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