Question
Automatic Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,200 per unit; variable cost = $420 per unit; fixed
Automatic Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,200 per unit; variable cost = $420 per unit; fixed costs = $4.93 million; quantity = 83,000 units. Suppose the company believes all of its estimates are accurate only to within 17 percent.
What values should the company use for the four variables given here when it performs its best-case and worst-case scenario analysis? (Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
Scenario | Unit Sales | Unit Price | Unit Variable Cost | Fixed Costs | |||
Base case | 83,000 | $ | 1,200 | $ | 420 | $ | 4,930,000 |
Best case | |||||||
Worst case | |||||||
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