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In: Finance
Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell...
Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell 5,900 pairs of sunglasses at a price of $154 each and a variable cost of $106 each. The equipment necessary for the project will cost $310,000 and will be depreciated on a straight-line basis over the 6-year life of the project. Fixed costs are $200,000 per year and the tax rate is 34 percent. How sensitive is the operating cash flow to a $1 increase in variable costs per pairs of sunglasses?
Solutions
jeff jeffy answered 3 months agoRelated Solutions
Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell...
Sun Brite has a new pair of sunglasses it is evaluating. The
company expects to sell 5,700 pairs of sunglasses at a price of
$152 each and a variable cost of $104 each. The equipment necessary
for the project will cost $300,000 and will be depreciated on a
straight-line basis over the 9-year life of the project. Fixed
costs are $180,000 per year and the tax rate is 35 percent. How
sensitive is the operating cash flow to a $1...
Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell...
Sun Brite has a new pair of sunglasses it is evaluating. The
company expects to sell 7,200 pairs of sunglasses at a price of
$167 each and a variable cost of $119 each. The equipment necessary
for the project will cost $375,000 and will be depreciated on a
straight-line basis over the 7-year life of the project. Fixed
costs are $330,000 per year and the tax rate is 35 percent. How
sensitive is the operating cash flow to a $1...
Jasper McKnight Sunglasses sell for about $150 per pair. Suppose the company incurs the following average...
Jasper McKnight Sunglasses sell for about $150 per pair. Suppose
the company incurs the following average costs per pair:
Direct materials
......................................................................................
$40
Direct labor
..............................................................................................
12
Variable manufacturing overhead
..............................................................
8
Variable marketing expenses
.....................................................................
3
Fixed manufacturing overhead
..............................................................
25*
Total costs
..............................................................................................
$88
*$2,100,000 total fixed manufacturing overhead/84,000 pairs of
sunglasses
Jasper McKnight has enough idle capacity to accept a
one-time-only special order from Arizona Glasses for 17,000 pairs
of sunglasses at $63 per pair. Jasper McKnight...
A new product will sell for $8. The company expects to sell around 900,000 units. (Use...
A new product will sell for $8. The company expects to sell
around 900,000 units. (Use a normal distribution with a mean of
900,000 and a standard deviation of 300,000.) Fixed costs are
normally distributed with a mean of $700,000 and a standard
deviation of $50,000. Unit variable costs are also normally
distributed with a mean of $3 and a standard deviation of $0.25.
Selling expenses are lognormally distributed with a mean of
$900,000 and a standard deviation of $50,000....
An industry will require the purchase of $675,000 in new equipment. The company expects to sell...
An industry will require the purchase of $675,000 in new
equipment. The company expects to sell the equipment at the end of
the project for 25% of its original cost, but some assets will
remain in the CCA class. Annual sales from this project are
estimated at $240,000. Initial net working capital equal to 30.00%
of sales will be required. All of the net working capital will be
recovered at the end of the project. The firm requires a 9.00%...
Shadee Corp. expects to sell 600 sun visors in May and 330 in June. Each visor...
Shadee Corp. expects to sell 600 sun visors in May and 330 in June. Each visor sells for $19. Shadee’s beginning and ending finished goods inventories for May are 70 and 45 units, respectively. Ending finished goods inventory for June will be 65 units.It expects the following unit sales for the third quarter:
July
560
August
470
September
460
Sixty percent of Shadee’s sales are cash. Of the credit sales, 52 percent is collected in the month...
Shadee Corp. expects to sell 500 sun visors in May and 340 in June. Each visor...
Shadee Corp. expects to sell 500 sun visors in May and 340 in
June. Each visor sells for $25. Shadee’s beginning and ending
finished goods inventories for May are 60 and 55 units,
respectively. Ending finished goods inventory for June will be 60
units.
Each visor requires a total of $4.00 in direct materials that
includes an adjustable closure that the company purchases from a
supplier at a cost of $1.50 each. Shadee wants to have 27 closures
on hand...
Shadee Corp. expects to sell 590 sun visors in May and 300 in June. Each visor...
Shadee Corp. expects to sell 590 sun visors in May and 300 in
June. Each visor sells for $16. Shadee’s beginning and ending
finished goods inventories for May are 65 and 55 units,
respectively. Ending finished goods inventory for June will be 60
units.
It expects the following unit sales for the third
quarter:
July
500
August
490
September
450
Sixty percent of Shadee’s sales are cash. Of the credit sales, 52
percent is collected in the month of the...
Shadee Corp. expects to sell 590 sun visors in May and 440 in June. Each visor...
Shadee Corp. expects to sell 590 sun visors in May and 440 in
June. Each visor sells for $25. Shadee’s beginning and ending
finished goods inventories for May are 85 and 60 units,
respectively. Ending finished goods inventory for June will be 50
units.
Each visor requires a total of $4.50 in direct materials that
includes an adjustable closure that the company purchases from a
supplier at a cost of $2.50 each. Shadee wants to have 32 closures
on hand...
Shadee Corp. expects to sell 560 sun visors in May and 320 in June. Each visor...
Shadee Corp. expects to sell 560 sun visors in May and 320 in
June. Each visor sells for $18. Shadee’s beginning and ending
finished goods inventories for May are 70 and 45 units,
respectively. Ending finished goods inventory for June will be 70
units.
It expects the following unit sales for the third quarter:
July
545
August
490
September
440
Sixty percent of Shadee’s sales are cash. Of the credit sales,
50 percent is collected in the month of the...
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