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Miller Mfg. is analyzing a proposed project. The company expects to sell 14,000 units, plus or...

Miller Mfg. is analyzing a proposed project. The company expects to sell 14,000 units, plus or minus 4 percent. The expected variable cost per unit is $14 and the expected fixed cost is $34,000. The fixed and variable cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $31,000. The tax rate is 34 percent. The sale price is estimated at $18 a unit, give or take 4 percent.
What is the net income under the worst case scenario?

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Answer #1
Sales $232,243 =14000*(1-4%)*18*(1-4%)
Less:
Costs $231,046 =14000*(1-4%)*14*(1+4%)+34000*(1+4%)
Depreciation $31,000
EBT -$29,803
Less: Tax payable @ 34% -$10,133
Net income -$19,670
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