Question

Mama'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 $49 each with expected sales of 3,600 tops annually. By adding the fleece tops, management feels the firm will sell an additional 220 pairs of jeans at $59 a pair and 350 fewer T-shirts at $18 each. The variable cost per unit is $36 on the jeans, $9 on the T-shirts, and $21 on the fleece tops. With the new item, the depreciation expense is $27,000 a year and the fixed costs are $62,000 annually. The tax rate is 34 percent. What is the project's operating cash flow?

Group of answer choices

$27,789

$34,708

$36,049

$38,419

Answer 1

What is the project's operating cash flow?

=(3600*(49-21)+220*(59-36)-350*(18-9)-62000-27000)*(1-34%)+27000
=36048.6