Given the soaring price of gasoline, Ford is considering introducing a new production line of gas-electric...

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Given the soaring price of gasoline, Ford is consideringintroducing a new production line of gas-electric hybrid sedans.The expected annual unit sales of the hybrid cars is 22,000; theprice is $26,000 per car. Variable costs of production are $14,000per car. The fixed overhead including salary of top executives is$80 million per year.
However, the introduction of the hybrid sedan will decreaseFord’s sales of regular sedans by 9,000 cars per year; the regularsedans have a unit price of $20,000, a unit variable cost of$12,000, and fixed costs of $250,000 per year. Depreciation costsof the production plant are $46,000 per year. The marginal tax rateis 40 percent.
What is the incremental annual cash flow from operations?

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The expected annual unit sales of the hybrid cars is 22000 the price is 26000 per car Variable costs of production are 14000 per car Incremental contribution Sale price See Answer

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Given the soaring price of gasoline, Ford is consideringintroducing a new production line of gas-electric hybrid sedans.The expected annual unit sales of the hybrid cars is 22,000; theprice is $26,000 per car. Variable costs of production are $14,000per car. The fixed overhead including salary of top executives is$80 million per year.However, the introduction of the hybrid sedan will decreaseFord’s sales of regular sedans by 9,000 cars per year; the regularsedans have a unit price of $20,000, a unit variable cost of$12,000, and fixed costs of $250,000 per year. Depreciation costsof the production plant are $46,000 per year. The marginal tax rateis 40 percent.What is the incremental annual cash flow from operations?