Cinram machines has the following estimates for its new gear assembly project: price = $1,340 per unit; variable costs = $348 per unit; fixed costs = $5.1 million; quantity = 82,000 units. suppose the company believes all of its estimates are accurate only to within ± 5 percent. what value should the company use for its total variable costs when performing its best-case scenario analysis

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Business

Kenyon Harrell

17 November, 13:56

Cinram machines has the following estimates for its new gear assembly project: price = $1,340 per unit; variable costs = $348 per unit; fixed costs = $5.1 million; quantity = 82,000 units. suppose the company believes all of its estimates are accurate only to within ± 5 percent. what value should the company use for its total variable costs when performing its best-case scenario analysis

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Isiah Mckee · Answer 1

Given:

Price per unit : 1,340

variable cost per unit: 348

fixed cost: 5.1 million

quantity produced: 82,000 units

estimate: + 5 percent

Total variable cost: (82,000) (1.05) (348) (0.95) = 28,464,660

Considering the accuracy of the estimate, the total variable cost is $28,464,660.00