Consider a three-year project with the following information: initial fixed asset investment = $347,600; straight-line depreciation to zero over the three-year life; zero salvage value; price per unit = $49.99; variable costs per unit = $30.82; fixed costs per year $187,000; quantity sold per year = 65,500 units; tax rate= 35 percent. How sensitive is OCF to an increase of one unit in the quantity sold?
Consider a three-year project with the following information: initial fixed asset investment = $347,600; straight-line depreciation to zero over the three-year life; zero salvage value; price per unit = $49.99; variable costs per unit = $30.82; fixed costs per year $187,000; quantity sold per year = 65,500 units; tax rate= 35 percent. How sensitive is OCF to an increase of one unit in the quantity sold?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 10E: Roberts Company is considering an investment in equipment that is capable of producing more...
Related questions
Question
![Consider a three-year project with the following information: initial fixed asset investment = $347,600; straight-line
depreciation to zero over the three-year life; zero salvage value; price per unit = $49.99; variable costs per unit =
$30.82; fixed costs per year = $187,000; quantity sold per year = 65,500 units; tax rate=35 percent. How sensitive
is OCF to an increase of one unit in the quantity sold?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdb89f4e8-0e39-47ab-b1ad-fe9ca12e9d4c%2Fa4899bbc-fc6c-4867-be61-c6ed48cf31e0%2Fcrzyvnp_processed.png&w=3840&q=75)
Transcribed Image Text:Consider a three-year project with the following information: initial fixed asset investment = $347,600; straight-line
depreciation to zero over the three-year life; zero salvage value; price per unit = $49.99; variable costs per unit =
$30.82; fixed costs per year = $187,000; quantity sold per year = 65,500 units; tax rate=35 percent. How sensitive
is OCF to an increase of one unit in the quantity sold?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Cornerstones of Cost Management (Cornerstones Ser…](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
![Cornerstones of Cost Management (Cornerstones Ser…](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub