Precise Machinery Is Analyzing a Proposed Project

question 51

Multiple Choice

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?

• A)$548.58
• B)$551.62
• C)$604.16
• D)$638.23
• E)$640.25

---

Definitions:

LIFO

An inventory valuation method, "Last-In, First-Out," where the most recently produced items are recorded as sold first.

Average Cost

A method of inventory valuation which calculates the cost of goods sold based on the average cost of all similar items in inventory.

Periodic Inventory System

An accounting method where the inventory is physically counted at specific intervals to determine the cost of goods sold and the ending inventory balance.

Cost Of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company, including material and labor costs.