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Kite Flite is considering making and selling custom kites in two sizes. The small kites would be priced at $12 and the large kites would be $39. The variable cost per unit is $5 and $14, respectively. Jill, the owner, feels that she can sell 1,900 of the small kites and 1,400 of the large kites each year. The fixed costs would be only $1,890 a year and the tax rate is 34 percent. What is the annual operating cash flow if the annual depreciation expense is $380?

Respuesta :

Answer:

Annual cash flow  = $31010.6

Explanation:

Given data:

Small kites price= $12 and

The large kites price = $39.

The variable cost per unit of small kites is $5 and  of large kites is $14

Number of unit of small kites sells = 1900

number of units of large kites sells = 1400

fixed cost = $1890

tax rate = 34%

annual depreciation cost = $380

Annual cash flow  = [{1900(12 - 5) + 1400(39-14) - (1890 - 380) } *(1 - 0.34)] + (380 *0.34)

Annual cash flow  = $31010.6

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