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, give or take 2 percent. What is the contribution margin per unit under the worst case scenario? - please show work

Answer
$209.52

$464.60

$469.52

$490.00

$515.40

Explanation / Answer

Worst sales = 2,100 *.95 Worst sales price =$750*.98 Worst variable cost =$260 *1.04 contribution margin per unit under the worst case scenario = $750*.98 -$260 *1.04 =$464.6

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