15

variable costs per pairs of sunglasses? Multiple Choice

Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell 5,300 pairs of sunglasses at a price of $148 each and a variable cost of $100 each. The equipment necessary for the project will cost $280,000 and will be depreciated on a straight-line basis over the 9-year life of the project. Fixed costs are $140,000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 increase in variable costs per pairs of sunglasses? Multiple Choice $3,148 $3,148 -$4,187 $3,498 -$3,887