Question

Katz's project has fixed costs of $70,000 per year. OCF is $30,000 at 5,000 quantity of...

Katz's project has fixed costs of $70,000 per year. OCF is $30,000 at 5,000 quantity of sales. If quantity sold increases from 5,000 to 5,300, what will be the new OCF after this increase in quantity of sales?

31000

32000

33000

36000

39700
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

In this question,OCF=$30,000 . Quantity of sales=5,000units . Fixed Cost=$70,000 . OCF=Number of units sold×(selling price/unit - variable cost/unit)-fixed cost

$30,000=5000×(selling price/unit - variable cost/unit)- $70,000

$30,000+$70,000=5000(selling price/unit - variable cost/unit)

$1,00,000=5000(selling price/unit - variable cost/unit)

(Selling price/unit - variable cost/unit)= 1,00,000÷5000

=$20/unit.

Here,the quantity sold increases to 5,300units.

Therefore,

OCF=5300×(selling price/unit - variable cost/unit)-$70,000

=5300×20 - 70,000

=$1,06000 - $70,000

=$36,000.

The present OCF when the number of units sold increases from 5,000 units to 5,300 units is $36,000.

Please do rate if it was helpful.

Thank You!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A proposed project has fixed costs of $36,000 per year. The operating cash flow at 12,000...
A proposed project has fixed costs of $36,000 per year. The operating cash flow at 12,000 units is $70,000.    a. Ignoring the effect of taxes, what is the degree of operating leverage?    b. If units sold rise from 12,000 to 12,400, what will be the increase in operating cash flow?    c. What is the new degree of operating leverage?
Q9) A proposed project has fixed costs of $43,000 per year. The operating cash flow at...
Q9) A proposed project has fixed costs of $43,000 per year. The operating cash flow at 13,000 units is $86,000. A) Ignoring the effect of taxes, what is the degree of operating leverage? B) If units sold rise from 13,000 to 13,200, what will be the increase in operating cash flow? C) What is the new degree of operating leverage?
3.Ballreich’s has observed that quantity of values in a town increases from 20000 bags per week...
3.Ballreich’s has observed that quantity of values in a town increases from 20000 bags per week to 24000 bags per week where it increases advertising expanding from $32000 to $33000. It has also in the market that the number of sales increases from 12000 to 13000 bags per week when its competitors raise their prices from 3.50 per bag to 3.75 per bag( while their advertising remain consistent) A. Ballreich’s knows that the price of electricity demand is 4.7 ....
We are evaluating a project that costs $719,000, has a life of 15 years, and has...
We are evaluating a project that costs $719,000, has a life of 15 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 124,000 units per year. Price per unit is $39, variable cost per unit is $20, and fixed costs are $728,347 per year. The tax rate is 22 percent, and we require a return of 17 percent on this project. 2c. What is the sensitivity...
A proposed project has fixed costs of $15,000, depreciation expense of $2,200, a sales quantity of...
A proposed project has fixed costs of $15,000, depreciation expense of $2,200, a sales quantity of 700, and EBIT of $1,580. What is the contribution margin per unit?
A project has fixed costs of $2,100 per year, depreciation charges of $600 a year, annual...
A project has fixed costs of $2,100 per year, depreciation charges of $600 a year, annual revenue of $10,800, and variable costs equal to two-thirds of revenues. a. If sales increase by 20%, what will be the percentage increase in pretax profits? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is the degree of operating leverage of this project? (Do not round intermediate calculations. Round your answer to 2 decimal...
A)We are evaluating a project that costs $117027, has a seven-year life, and has no salvage...
A)We are evaluating a project that costs $117027, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 4144 units per year. Price per unit is $52, variable cost per unit is $28, and fixed costs are $82376 per year. The tax rate is 39 percent, and we require a 13 percent return on this project. Suppose the projections given for price, quantity, variable...
A proposed project has fixed costs of $78,000 per year. The operating cash flow at 4,500...
A proposed project has fixed costs of $78,000 per year. The operating cash flow at 4,500 units is $95,600. Ignoring the effect of taxes, what is the degree of operating leverage? (Do not round intermediate calculations. Round your answer to 4 decimal places, e.g., 32.1616.) Degree of operating leverage If units sold rise from 4,500 to 5,000, what will be the new operating cash flow? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Operating...
Margarite's Enterprises is considering a new project. The project will require $325,000 for new fixed assets,...
Margarite's Enterprises is considering a new project. The project will require $325,000 for new fixed assets, $160,000 for additional inventory and $35,000 for additional accounts receivable. Short-term debt is expected to increase by $100,000 and long-term debt is expected to increase by $300,000. The project has a 5-year life. The fixed assets will be depreciated straight-line to a zero book value over the life of the project. At the end of the project, the fixed assets can be sold for...
102. Consider a 6-year project with the following information: initial fixed asset investment = $460,000; straight-line...
102. Consider a 6-year project with the following information: initial fixed asset investment = $460,000; straight-line depreciation to zero over the 6-year life; zero salvage value; price = $34; variable costs = $19; fixed costs = $188,600; quantity sold = 90,528 units; tax rate = 32 percent. What is the sensitivity of OCF to changes in quantity sold? A. $10.20 per unit B. $11.16 per unit C. $11.38 per unit D. $12.33 per unit E. $12.54 per unit OCF =...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT