Question

XYZ company is analyzing a proposed project. The company expects to sell 1,500 units, ±3 percent. The expected variable cost per unit is $220 and the expected fixed costs are $438,000. Cost estimates are considered accurate within a ±2 percent range. The depreciation expense is $64,000. The sales price is estimated at $647 per unit, ±2 percent. What is the sales revenue under the worst-case scenario?

Answer 1

$922,557.30

Step-by-step explanation:

Sales revenue = Quantity sold * Price

a. Worst case quantity = 1500*97% = 1455

b. Worst case price = 647*98% = $634.06

Sales revenue under worst case = 1455*$634.06

Sales revenue under worst case = $922,557.3