Ben's Border Café Is Considering a Project Which Will Produce

question 98

Multiple Choice

Ben's Border Café is considering a project which will produce sales of $16,000 and increase cash expenses by $10,000. If the project is implemented,taxes will increase from $23,000 to $24,500 and depreciation will increase from $4,000 to $5,500. What is the amount of the operating cash flow using the top-down approach?

• A) $4,000
• B) $4,500
• C) $6,000
• D) $7,500
• E) $8,500

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Definitions:

Overbooking

The practice of selling or booking more seats or reservations than available capacity, used in industries like airlines and hospitality to account for cancellations.

Optimization

The process of making something as fully perfect, functional, or effective as possible, often through mathematical models in operations research.

Upset Customers

Upset customers are individuals dissatisfied with a product or service, potentially leading to complaints or negative feedback.

Unutilized Assets

Resources or assets within a business that are currently not in use, production, or generating revenue, often representing a potential inefficiency or opportunity for optimization.