Question
With the successful St. Louis expansion behind them, Dunder Mifflin is now interested in opening a regional sales office in Kansas City. Michael Scott has
With the successful St. Louis expansion behind them, Dunder Mifflin is now interested in opening a regional sales office in Kansas City. Michael Scott has estimated the following information for this proposed 4-year project: initial fixed asset investment = $411,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $36, variable costs = $20; fixed costs = $196,566; quantity sold = 88,993 units; tax rate = 23 percent. What is the dollar sensitivity of OCF to changes in quantity sold? That is, how much does OCF change (in dollar terms) for a one-unit increase in quantity sold? Enter the dollar amount to two decimal places (ex. -$5,000.45 as -5000.45 or +$3,450.70 as 3450.70).
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