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 4 percent.What are the total variable costs for the worst-case scenario?
A)$890,400
B)$1,561,560
C)$2,448,037
D)$2,451,960
E)$2,691,960

Question

Quizplus · Accepted Answer

Total variable costs = [($21.20 + $37.18) × 1.04][42,000 × 0.96] = $2,448,037

Your Company Is Reviewing a Project with Estimated Labor Costs