Burke's Corner currently sells blue jeans and T-shirts.Management is considering adding fleece tops to its inventory.The tops would sell for $49 each with expected sales of 3,200 tops annually.By adding the fleece tops, management feels the company will sell an additional 150 pairs of jeans at $79 a pair and 220 fewer T-shirts at $18 each.The variable cost per unit is $36 on the jeans, $7 on the T-shirts, and $21 on the fleece tops.The project's depreciation expense is $23,000 a year and the fixed costs are $21,000 annually.The tax rate is 34 percent.What is the project's operating cash flow?

Question

Quizplus · Accepted Answer

The Answer of Burke's Corner currently sells blue jeans and T-shirts.Management is considering adding fleece tops to its inventory.The tops would sell for $49 each with expected sales of 3,200 tops annually.By adding the fleece tops, management feels the company will sell an additional 150 pairs of jeans at $79 a pair and 220 fewer T-shirts at $18 each.The variable cost per unit is $36 on the jeans, $7 on the T-shirts, and $21 on the fleece tops.The project's depreciation expense is $23,000 a year and the fixed costs are $21,000 annually.The tax rate is 34 percent.What is the project's operating cash flow?

Burke's Corner Currently Sells Blue Jeans and T-Shirts