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Kites Galore is considering making and selling custom kites in two sizes. The small kites would be priced at $15 and the large kites would be $20. The variable cost per unit is $9 and $12, respectively. Tom, the owner, feels that he could sell 3,600 of the small kites and 2,700 of the large kites each year. The fixed costs would only be $4,800 a year and the tax rate is 27 percent. What is the annual operating cash flow if the annual depreciation expense is $2,800?

Kites Galore is considering making and selling custom kites in two sizes. The small kites would be priced at $15 and the large kites would be $20. The variable cost per unit is $9 and $12, respectively. Tom, the owner, feels that he could sell 3,600 of the small kites and 2,700 of the large kites each year. The fixed costs would only be $4,800 a year and the tax rate is 27 percent. What is the annual operating cash flow if the annual depreciation expense is $2,800?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kites Galore is considering making and selling custom kites in two sizes. The small kites would be priced at $15 and the large kites would be $20. The variable cost per unit is $9 and $12, respectively. Tom, the owner, feels that he could sell 3,600 of the small kites and 2,700 of the large kites each year. The fixed costs would only be $4,800 a year and the tax rate is 27 percent. What is the annual operating cash flow if the annual depreciation expense is $2,800?
Transcribed Image Text:Kites Galore is considering making and selling custom kites in two sizes. The small kites would be priced at $15 and the large kites would be $20. The variable cost per unit is $9 and $12, respectively. Tom, the owner, feels that he could sell 3,600 of the small kites and 2,700 of the large kites each year. The fixed costs would only be $4,800 a year and the tax rate is 27 percent. What is the annual operating cash flow if the annual depreciation expense is $2,800?
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