Question

go fly a kite is considering making and selling custom kites in two sizes. the small kites would be priced at $12.40 and the large kites would be $25.40. the variable cost per unit is $6.00 and $13.00, respectively. jill, the owner, feels that she can sell 3,550 of the small kites and 1,985 of the large kites each year. the fixed costs would be $2,120 a year and the depreciation expense is $1,850. the tax rate is 35 percent. what is the annual operating cash flow?

Answer 1

Operating cash flow = 10,936.5 A company's normal business operations' cash generation is measured by operating cash flow (OCF).

Is EBIT equivalent to operating cash flow?

The fact that EBIT includes non-operating income, non-operating expenses, and other income is the primary distinction between EBIT and operating income. Since EBIT demonstrates a company's net income without the costs of debt interest and taxes, it is frequently used in place of net income.

Little kites= $11.40

Enormous kites= $24.40

Variable expense per unit:

Small kites cost $5.5, while larger ones cost $12.

Small kites would cost $3,050; large kites would cost $1,835; annual depreciation would cost $1,350. The rate of taxation is 34%.

Sales = (11.4*3,050) + (24.4*1,835) = 79,544 Total variable costs = (5.5*3,050) + (24.4*1,835) = (61,549) Contribution margin = 17,995 Fixed costs = (2,120) Depreciation = (1,350) EBIT = 14,525 Tax = (14,525*0.34) = (4,938.5) Depreciation = 1,350

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