Question

The Short Stack expects to sell 8,000 units, ±2 percent. The expected variable cost per unit is $8,±3 percent, and the expected fixed costs are $20,000, ±1 percent. The depreciation expense is $6,000. The sale price is estimated at $23 a unit, ±2 percent. What is the sales revenue under the optimistic case scenario?

Select one:

a. $191,433.60

b. $187,680.00

c. $83,760.33

d. $197,335.20

e. $88,000.61

Answer 1

a. $191,433.60

Sales revenue under optimistic case:

$\textup{= Base case sale units*(1+up rate)*Base case sale price*(1+up rate)}$

$\textup{= 8,000*(1+0.02)*23*(1+0.02)}$

$\textup{= 8,160*23.46}$

$\bg_green \large = \$191,433.60$

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.