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 $57 each with expected sales of 4,100 tops annually. By adding the fleece tops, management feels the firm will sell an additional 265 pairs of jeans at $69 a pair and 400 fewer T-shirts at $30 each. The variable cost per unit is $37 on the jeans, $21 on the T-shirts, and $33 on the fleece tops. With the new item, the depreciation expense is $37,000 a year and the fixed costs are $74,000 annually. The tax rate is 34 percent. What is the project's operating cash flow?
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