3 Floyds Brewing Co. is analyzing a new beverage line called Dusting Zombies. The company expects...
3 Floyds Brewing Co. is analyzing a new beverage line called Dusting Zombies. The company expects to sell 2,298 units, give or take 10%. The expected variable cost per unit is $7.71 and the expected fixed costs are $11,022. Cost estimates are considered accurate within a plus or minus 5% range. The depreciation expense is $4,000. The sale price is estimated at $16 a unit, give or take 2%.
What is the amount of the fixed cost per unit under the pessimistic case scenario?
Homework Answers
Fixed cost per unit:
= Expected fixed costs/Expected unit sales
= $11,022×(1+5%)/2,298×(1-10%)
= $11,573.10/2,068.20
= $5.60
Hence, fixed costs per unit is $5.60
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