You are analyzing a project and have developed the following estimates: unit sales = 2,600,price per unit = $56,variable cost per unit = $39,fixed costs = $24,700.The depreciation is $15,800 a year and the tax rate is 35 percent.What effect would a decrease of $1 in the variable cost per unit have on the operating cash flow?

Question

Quizplus · Accepted Answer

Change in operating cash flow by $1 decrease in variable cost per unit = (2,600 × $1) × (1 - 0.35) = $1,690

You Are Analyzing a Project and Have Developed the Following