1.Olin Transmissions, Inc., has the following estimates for its new gear assembl

Question

1.Olin Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1677 per unit; variable costs = $298 per unit; fixed costs = $4016689; quantity = 68045 units. Suppose the company believes all of its estimates are accurate only within +/-14 percent. What is the company's Earnings Before Tax when it performs its best-case scenario analysis? (Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.)

Explanation / Answer

Earning Before Tax

Total Price = Price per unit * total units= 1677 * 68045 = 114111465

Total Cost = Fixed Cost + Variable Cost

= 4016689 + 298* 68045 = 4016689 + 20277410 = 24294099

Earning Before Tax = Total Price - Total Cost = 114111465 - 24294099 = 89817366

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