A project currently generates sales of $10 million, variable costs equal 50% of sales, and fixed costs are $2 million. The firms tax rate is 35%. Assume all sales and expenses are cash items.

a. What are the effects on cash flow, if sales increase from $10 million to $11 million? (Input the amount as positive value. Enter your answer in dollars not in millions.)

b. What are the effects on cash flow, if variable costs increase to 65% of sales?