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 = $1,090 per unit; variable cost = $310 per unit; fixed costs = $4.82 million; quantity = 72,000 units. Suppose the company believes all of its estimates are accurate only to within ± 17 percent. Required: 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).) Scenario Unit Sales Unit Price Unit Variable Cost Fixed Costs Base case 72,000 $ 1,090 $ 310 $ 4,820,000 Best case Worst case

Explanation / Answer

Units Price Cost Fixed cost Base case    72,000 $ 1,090 $ 310 $ 4,820,000 Best case    84,240 $ 1,275 $ 257 $ 4,000,600 Worst Case    59,760 $     905 $ 363 $ 5,639,400

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