59. Precise Machinery is analyzing a proposed project. The company expects to se

Question

59.

Precise Machinery is analyzing a proposed project. The company expects to sell 1,100 units, ±5 percent. The expected variable cost per unit is $174 and the expected fixed costs are $218,000. Cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $76,000. The sales price is estimated at $335 per unit, give or take 2 percent. What is the contribution margin per unit under the best case scenario?

A.

$160.74

B.

$194.33

C.

$148.13

D.

$190.00

E.

$174.66

59.

Precise Machinery is analyzing a proposed project. The company expects to sell 1,100 units, ±5 percent. The expected variable cost per unit is $174 and the expected fixed costs are $218,000. Cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $76,000. The sales price is estimated at $335 per unit, give or take 2 percent. What is the contribution margin per unit under the best case scenario?

A.

$160.74

B.

$194.33

C.

$148.13

D.

$190.00

E.

$174.66

Explanation / Answer

Precise Machinery All Amounts in $ Sales Price in a best case scenario = 102% of $ 335 = 341.7 Variable Costs per unit in a best case scenario = $ 174 X 96% (4% lower) 167.04 Contribution Margin in a best case scenario 174.66

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