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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Stellar Plastics is analyzing a proposed project. The company expects to sell 12,000 units, give or take 4 percent. The expected variable cost per unit is $6.00 and the expected fixed cost is $36,000. The fixed and variable cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $31,000. The tax rate is 34 percent. The sale price is estimated at $15.00 a unit, give or take 5 percent. What is the operating cash flow for a sensitivity analysis using total fixed costs of $32,000?
45000
25700
29700
76000
60700
Please show math part
Â
ans is $60,700
| Statement showing computation of cash flows after tax | Â |
| Particulars | Amount |
| Sale price per unit | 15.00 |
| Variable cost per unit | (6.00) |
| Contribuion cost per unit (SP-VC) | 9.00 |
| No of units sold | 12,000.00 |
| Total contribution(12,000*9) | 108,000.00 |
| Fixed costs | (32,000.00) |
| Depreciation | (31,000.00) |
| Income before tax (Cont - Fixed costs - Depreciation) | 45,000.00 |
| Tax @.34 | (15,300.00) |
| Income after tax | 29,700.00 |
| Add : Depreciation | 31,000.00 |
| Cash flows after tax | 60,700.00 |
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