Precise Machinery is analyzing a proposed project.The company expects to sell 2,250 units,give or take 5 percent.The expected variable cost per unit is $260 and the expected fixed costs are $589,000.Cost estimates are considered accurate within a plus or minus 3 percent range.The depreciation expense is $129,000.The sales price is estimated at $750 per unit,give or take 2 percent.What is the amount of the total costs per unit under the worst case scenario?
A)$548.58
B)$551.62
C)$604.16
D)$638.23
E)$640.25

Question

Quizplus · Accepted Answer

Total costs per unit_{worst case} = [(2,250 × 0.95) (260 × 1.03) + ($589,000 × 1.03)]/(2,250 × 0.95) = $551.62

Precise Machinery Is Analyzing a Proposed Project