Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell 6,200 pairs of sunglasses at a price of $157 each and a variable cost of $109 each. The equipment necessary for the project will cost $325,000 and will be depreciated on a straight-line basis over the 5-year life of the project. Fixed costs are $230,000 per year and the tax rate is 21 percent. 

How sensitive is the operating cash flow to a $1 increase in variable costs per pairs of sunglasses?

Answer rating: 100% (QA)

To determine the sensitivity of the operating cash flow to a 1 increase in variable costs per pair of sunglasses we need to calculate the change in op... View the full answer