Question
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
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 $48 each with expected sales of 3,550 tops annually. By adding the fleece tops, management feels the firm will sell an additional 210 pairs of jeans at $58 a pair and 345 fewer T-shirts at $19 each. The variable cost per unit is $26 on the jeans, $10 on the T-shirts, and $22 on the fleece tops. With the new item, the depreciation expense is $28,000 a year and the fixed costs are $63,000 annually. The tax rate is 35 percent. What is the project's operating cash flow?
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