A clothing manufacturer is considering whether to add hoodies to its range of products. The hoodies would sell for $45 each and the company expects to sell 10,000 units per year. Selling hoodies, however, would cause sales of conventional jumpers to decrease by 1,000 units per year. The jumpers sell for $43 per unit. The variable costs of production are $25 per unit for hoodies and $20 per unit for jumpers. If the company adds hoodies to its range of products, fixed costs will increase by $49.000 per year and annual depreciation will increase by $18,000. What is the incremental operating cash flow from selling hoodies, if the corporate tax rate is 30%?

Answer rating: 100% (QA)

To calculate the incremental operating cash flow from selling hoodies we need to consider the change... View the full answer