Question
25. 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
25. 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 $58 each with expected sales of 4,050 tops annually. By adding the fleece tops, management feels the firm will sell an additional 260 pairs of jeans at $68 a pair and 395 fewer T-shirts at $29 each. The variable cost per unit is $36 on the jeans, $20 on the T-shirts, and $32 on the fleece tops. With the new item, the depreciation expense is $38,000 a year and the fixed costs are $73,000 annually. The tax rate is 22 percent. What is the project's operating cash flow?
$29,837
$24,292
$37,271
$16,514
$42,817
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