Question
11. Burke's Corner currently sells blue jeans and T-shirts. Management is considering adding fleece tops to its inventory to provide a cooler weather option. The
11. Burke's Corner currently sells blue jeans and T-shirts. Management is considering adding fleece tops to its inventory to provide a cooler weather option. The tops would sell for $55 each with expected sales of 3,900 tops annually. By adding the fleece tops, management feels the firm will sell an additional 245 pairs of jeans at $65 a pair and 380 fewer T-shirts at $26 each. The variable cost per unit is $33 on the jeans, $17 on the T-shirts, and $29 on the fleece tops. With the new item, the depreciation expense is $35,000 a year and the fixed costs are $70,000 annually. The tax rate is 21 percent. What is the project's operating cash flow?
$28,328
$26,084
$39,596
$30,188
$35,648
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started