Purchase Solution

The Best-Case Scenario

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Olin Transmissions, Inc., has the following estimates for its new gear assembly project: price = \$3,000 per unit; variable costs = \$600 per unit; fixed costs = \$1.8 million; quantity = 90,000 units. Suppose the company believes all of its estimates are accurate only to within ±20 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?

Scenario Units Sales Unit Price Unit Variable cost Fixed Costs
Base _________ \$ _________ \$_________ \$________
Best _________ _________ _________ ________
Worst _________ _________ _________ ________

Solution Summary

This solution illustrates how to compute best and worst case scenario estimates.

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