Stinnett Transmissions, Incorporated, has the following estimates for its new gear assembly project: Price = $1,170 per unit; variable cost $390 per unit; fixed costs $4.90 million; quantity = 80,000 units. Suppose the company believes all of its estimates are = = accurate only to within ±15 percent. What values should the company use for the four variables given here when it performs its best- case and worst-case scenario analysis? Note: Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.
Stinnett Transmissions, Incorporated, has the following estimates for its new gear assembly project: Price = $1,170 per unit; variable cost $390 per unit; fixed costs $4.90 million; quantity = 80,000 units. Suppose the company believes all of its estimates are = = accurate only to within ±15 percent. What values should the company use for the four variables given here when it performs its best- case and worst-case scenario analysis? Note: Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Stinnett Transmissions, Incorporated, has the following estimates for its new gear assembly project: Price $1,170 per unit; variable
cost $390 per unit; fixed costs $4.90 million; quantity = 80,000 units. Suppose the company believes all of its estimates are
accurate only to within ±15 percent. What values should the company use for the four variables given here when it performs its best-
case and worst-case scenario analysis?
Note: Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest
whole number, e.g., 1,234,567.
Scenario
Base case
Best case
Worst case
Unit Sales
Unit Price
80,000 $
Unit Variable Cost Fixed Costs
1,170 $
390 $ 4,900,000
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