Your company is reviewing a project with estimated labor costs of $21.20 per unit, estimated raw material costs of $37.18 a unit, and estimated fixed costs of $20,000 a month. Sales are projected at 42,000 units over the one-year life of the project. All estimates are accurate within a range of plus or minus 5 percent. What are the total variable costs for the worst-case scenario?
A)$890,400
B)$1,561,560
C)$2,445,830
D)$2,451,960
E)$2,691,960

Question

Quizplus · Accepted Answer

Total variable costs = [($21.20 + $37.18) F1F1F1S1F1F1F10 1.05][42,000 F1F1F1S1F1F1F10 0.95] = $2,445,830

Your Company Is Reviewing a Project with Estimated Labor Costs