61.
Precise Machinery is analyzing a proposed project. The company expects to
sell 2,250 units, give or take 5 percent. The expected variable cost per unit
is $260 and the expected fixed costs are $589,000. Cost estimates are
considered accurate within a plus or minus 3 percent range. The
depreciation expense is $129,000. The sales price is estimated at $750 per
unit, give or take 2 percent. What is the amount of the total costs per unit
under the worst case scenario?
62.
Precise Machinery is analyzing a proposed project. The company expects to
sell 2,100 units, give or take 5 percent. The expected variable cost per unit
is $260 and the expected fixed costs are $589,000. Cost estimates are
considered accurate within a plus or minus 4 percent range. The
depreciation expense is $129,000. The sales price is estimated at $750 per
unit, give or take 2 percent. The tax rate is 35 percent. The company is
conducting a sensitivity analysis on the sales price using a sales price
estimate of $755. What is the operating cash flow based on this analysis?
63.
Precise Machinery is analyzing a proposed project. The company expects to
sell 2,100 units, give or take 5 percent. The expected variable cost per unit
is $260 and the expected fixed costs are $589,000. Cost estimates are
considered accurate within a plus or minus 4 percent range. The
depreciation expense is $129,000. The sales price is estimated at $775 per
unit, give or take 2 percent. The tax rate is 34 percent. The company is
conducting a sensitivity analysis with fixed costs of $590,000. What is the
OCF given this analysis?
64.
Miller Mfg. is analyzing a proposed project. The company expects to sell
8,000 units, plus or minus 2 percent. The expected variable cost per unit is
$11 and the expected fixed costs are $287,000. The fixed and variable cost
estimates are considered accurate within a plus or minus 5 percent range.
The depreciation expense is $68,000. The tax rate is 32 percent. The sales
price is estimated at $64 a unit, plus or minus 3 percent. What is the
earnings before interest and taxes under the base case scenario?
65.
Miller Mfg. is analyzing a proposed project. The company expects to sell
8,000 units, plus or minus 4 percent. The expected variable cost per unit is
$11 and the expected fixed costs are $290,000. The fixed and variable cost
estimates are considered accurate within a plus or minus 5 percent range.
The depreciation expense is $68,000. The tax rate is 32 percent. The sales
price is estimated at $64 a unit, give or take 3 percent. What is the
operating cash flow under the best case scenario?
66.
Miller Mfg. is analyzing a proposed project. The company expects to sell
8,000 units, plus or minus 2 percent. The expected variable cost per unit is
$11 and the expected fixed costs are $287,000. The fixed and variable cost
estimates are considered accurate within a plus or minus 5 percent range.
The depreciation expense is $68,000. The tax rate is 32 percent. The sales
price is estimated at $64 a unit, give or take 3 percent. What is the net
income under the worst case scenario?
67.
Stellar Plastics is analyzing a proposed project. The company expects to sell
12,000 units, plus or minus 5 percent. The expected variable cost per unit is
$3.20 and the expected fixed costs are $30,000. The fixed and variable cost
estimates are considered accurate within a plus or minus 5 percent range.
The depreciation expense is $24,000. The tax rate is 34 percent. The sales
price is estimated at $7.50 a unit, plus or minus 4 percent. What is the
operating cash flow for a sensitivity analysis using total fixed costs of
$31,000?
68.
Sunset United is analyzing a proposed project. The company expects to sell
15,000 units, plus or minus 4 percent. The expected variable cost per unit is
$120 and the expected fixed costs are $311,000. The fixed and variable cost
estimates are considered accurate within a plus or minus 3 percent range.
The depreciation expense is $74,000. The tax rate is 35 percent. The sales
price is estimated at $170 a unit, plus or minus 2 percent. What is the
contribution margin per unit for a sensitivity analysis using a variable cost
per unit of $125?
69.
Your company is reviewing a project with estimated labor costs of $21.20
per unit, estimated raw material costs of $37.18 a unit, and estimated fixed
costs of $20,000 a month. Sales are projected at 42,000 units over the one–
year life of the project. All estimates are accurate within a range of plus or
minus 4 percent. What are the total variable costs for the worst-case
scenario?
70.
A project has earnings before interest and taxes of $14,600, fixed costs of
$52,000, a selling price of $29 a unit, and a sales quantity of 16,000 units.
All estimates are accurate within a plus/minus range of 3 percent.
Depreciation is $12,000. What is the base case variable cost per unit?
71.
At a production level of 4,500 units, a project has total costs of $107,000.
The variable cost per unit is $12.50. Assume the firm can increase
production by 1,000 units without increasing its fixed costs. What will the
total costs be if 4,800 units are produced?
72.
A company is considering a project with a cash break-even point of 22,600
units. The selling price is $28 a unit, the variable cost per unit is $13, and
depreciation is $14,000. What is the projected amount of fixed costs?
73.
At the accounting break-even point, Swiss Mountain Gear sells 14,600 ski
masks at a price of $12 each. At this level of production, the depreciation is
$58,000 and the variable cost per unit is $4. What is the amount of the fixed
costs at this production level?
74.
The Coffee Express has computed its fixed costs to be $0.34 for every cup
of coffee it sells given annual sales of 212,000 cups. The sales price is $1.49
per cup while the variable cost per cup is $0.63. How many cups of coffee
must it sell to break-even on a cash basis?
75.
The Metal Shop produces 1.8 million metal fasteners a year for industrial
use. At this level of production, its total fixed costs are $320,000 and its
total costs are $522,000. The firm can increase its production by 5 percent,
without increasing either its total fixed costs or its variable costs per unit. A
customer has made a one-time offer for an additional 50,000 units at a price
per unit of $0.10. Should the firm sell the additional units at the offered
price? Why or why not?
76.
Wexford Industrial Supply is considering a new project with estimated
depreciation of $26,000, fixed costs of $79,000, and total sales of $187,000.
The variable costs per unit are estimated at $11.80. What is the accounting
break-even level of production?
77.
The accounting break-even production quantity for a project is 12,320 units.
The fixed costs are $216,000 and the contribution margin per unit is $28.
The fixed assets required for the project will be depreciated on straight-line
basis to zero over the project’s 5-year life. What is the amount of fixed
assets required for this project?
78.
A project has an accounting break-even point of 15,329 units. The fixed
costs are $382,000 and the projected variable cost per unit is $29.10. The
project will require $780,000 for fixed assets which will be depreciated
straight-line to zero over the project’s 6-year life. What is the projected
sales price per unit?
79.
A proposed project has fixed costs of $9,800, depreciation expense of
$2,550, and a sales quantity of 2,100 units. The total variable costs are
$5,607. What is the contribution margin per unit if the projected level of
sales is the accounting break-even point?
80.
Spencer Tools would like to offer a special product to its best customers.
However, the firm wants to limit its maximum potential loss on this product
to the firm’s initial investment in the project. The fixed costs are estimated
at $21,000, the depreciation expense is $11,000, and the contribution
margin per unit is $12.50. What is the minimum number of units the firm
should pre-sell to ensure its potential loss does not exceed the desired
level?