Newton Industries Is Considering a Project and Has Developed the Following

question 54

Multiple Choice

Newton Industries is considering a project and has developed the following estimates: unit sales = 4,800, price per unit = $67, variable cost per unit = $42, annual fixed costs = $11,900.The depreciation is $14,700 a year and the tax rate is 34 percent.What effect would an increase of $1 in the selling price have on the operating cash flow?

• A)$3,168
• B)$4,823
• C)$1
• D)$83,448
• E)$82,368

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Definitions:

Standard Activity Index

A benchmark used to measure the amount of activity, productivity, or performance in a given scenario, often compared to an industry standard.

Budgeted Overhead Costs

The estimated costs related to the indirect aspects of manufacturing or service delivery that are planned for a specific period.

Board Feet

A unit of measure for the volume of lumber, representing a piece of wood that is one foot long, one foot wide, and one inch thick or its cubic equivalent.

Pounds

Pounds are a unit of weight commonly used in the British imperial system and United States customary units, equivalent to approximately 0.453592 kilograms.