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Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $3,100...

Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $3,100 per unit; variable costs = $620 per unit; fixed costs = $4.4 million; quantity = 92,000 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 scenario analysis? What about the worst-case scenario? Complete the table below.

  

Scenarios Unit Sales Unit Price Unit Variable Cost Fixed Cost
Base
Best
Worst
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Answer #1

Best Case Scenario- This is the best possible scenario, therefore price and quantity will be at the maximum possible level (i.e. +15%) and variable, fixed costs will be at the lowest possible level (i.e. -15%)

Worst Case Scenario- This is the worst possible scenario, therefore price and quantity will be at the minimum possible level (i.e. -15%) and variable, fixed costs will be at the highest possible level (i.e. +15%)

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