New Town Instruments is analyzing a proposed project. The company expects to sell 2,100 units, ±4 percent. The expected variable cost per unit is $270 and the expected fixed costs are $548,000. Cost estimates are considered accurate within a plus or minus 3 percent range. The depreciation expense is $118,000. The sales price is estimated at $789 per unit, plus or minus 5 percent. What is the sales revenue under the worst case scenario?

sales revenue under the worst case is $1511092.8

Explanation:

Given data

sell = 2,100 units, ±4 percent

cost per unit = $270

fixed costs = $548,000

Cost estimates = ±3 percent

depreciation expense = $118,000

sales price = $789 per unit ±5 percent

to find out

sales revenue under the worst case

solution

we know that sale revenue = sale price * number of unit

so we have find sale in worst case that is sales price * 95%

sale price in worst case = 789 * 95%

sale price in worst case = $749.55

and

number of unit = sell * 96%

number of unit = 2100 * 96%

number of unit = 2016

so that in worst condition

sale revenue = sale price * number of unit

sale revenue = 749.55 * 2016

sale revenue = 1511092.8

so sales revenue under the worst case is $1511092.8