For a firm facing a marginal income tax rate of 34 percent, what is the after tax cash flow effect of (a) A $1,000 increase in contribution margin during the year, (b) A $500 increase in cash operating expenses ...

Given a marginal incometax rate of 34 a The aftertax cash effect of ...

For a firm facing a marginal income tax rate of 34 percent, what is the after-tax cash-flow

Question:

For a firm facing a marginal income tax rate of 34 percent, what is the after-tax cash-flow effect of:
(a) A $1,000 increase in during the year,
(b) A $500 increase in cash operating expenses?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...