2D1B THE FOLLOWING SCHEDULE REFLECTS THE INCREMENTAL COSTS AND REVENU...
290.
CSO: 2D1b
LOS: 2D1b
The following schedule reflects the incremental costs and revenues for a capital project.
The company uses straight-line depreciation. The interest expense reflects an allocation
of interest on the amount of this investment, based on the company’s weighted average
cost of capital.
Revenues
$650,000
Direct costs
$270,000
Variable overhead
50,000
Fixed overhead
20,000
Depreciation
70,000
General & administrative
40,000
Interest expense
8,000
Total costs
458,000
Net profit before taxes
$192,000
The annual cash flow from this investment, before tax considerations, would be
a.
$192,000.
b.
$200,000.
c.
$262,000.
d.
$270,000.