Abuela Pastries operates a chain of bakeries and is considering the sprinkle cookie project, which would involve selling sprinkle cookies for 1 year. The firmexpects sales of sprinkle cookies to be $158,000 and associated costs from flour, butter, sugar, etc. used to make sprinkle cookies to be $69,000. The firmbelieves that sales of frosted cookies, a type of cookie that is currently offered by the firm, would be $33,000 less with the addition of sprinkle cookies, andthat costs associated with frosted cookies would be $18,000 less with the addition of sprinkle cookies. Finally, Abuela Pastries believes that selling sprinklecookies would increase traffic to its bakeries, which would increase expected sales of bread, cakes, and other items by $23,000 more than it would be withoutthe addition of sprinkle cookies, and increase costs of bread, cakes, and other items by $15,000 more than it would be without the addition of sprinkle cookies.What is the operating cash flow (OCF) for year 1 that Abuela Pastries should use to analyze the sprinkle cookie project? The tax rate is 41 percent and the costof capital is 3.64 percent. Relevant depreciation is expected to be $5,000.O $62,230.00 (plus or minus $10)$50,430.00 (plus or minus $10)$54,560.00 (plus or minus $10)$46,890.00 (plus or minus $10)None of the above is within $10 of the correct answer

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Answered: Abuela Pastries operates a chain of…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11E

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