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Category > Business & Finance Posted 12 Dec 2017 My Price 10.00

sale of a new sound board used in recording studios

I'm trying to figure out the EBIT of an income statement I am working on. 

Rolston Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $26,400, and the company expects to sell 1,500 per year. The company currently sells 1,850 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,520 units per year. The old board retails for $22,300. Variable costs are 55 percent of sales, depreciation on the equipment to produce the new board will be $1,975,000 per year, and fixed costs are $2,400,000 per year.

I calculated the sales as 39,600,000 and costs at 22,107,550 leaving me with an EBIT of 17,492,450. Then when I plug the EBIT into the calculation for OCF, I'm still getting an incorrect answer. I set up my OCF calculation like this: 17,492,450(ebit) + 1,975,000(depreciation) - 6,647,131(taxes). I'm not sure what exactly I'm doing wrong. 

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CourseLover
(12)
Status NEW Posted 12 Dec 2017 02:12 PM My Price 10.00

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