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?

Question

Phelps

Business

6 July, 21:13

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?

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Answers (1)

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Puck · Answer 1

Annual cash flow = $31010.6

Explanation:

Given dа ta:

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