Answer:
4.68
Explanation:
The computation of operating cash flow is shown below:-
Sales = $45 × 103,000 $4,635,000
Less: Variable cost $39 × 103,000 $4,017,000
Contribution margin $618,000
Less:- Fixed cost $270,000
EBITDA $348,000
Less: Depreciation ($595,000 ÷ 4) $148,750
EBIT $199,250
Less: Tax (199250 × 0.22) $43,835
Net income $155,415
Add: Depreciation $148,750
Operating cash flow $304,165
Change in Operating cash flow = (Selling price - Variable cost per unit) × (1- Tax rate)
= ($45 - $39) × (1 - 0.22)
= 6 × 0.78
= $4.68
Operating cash flow (after increase in sales by 1 unit)
Sales ($45× 103,001) $4,635,045
Less: Variable cost (39 × 103,001) $4,017,039
Contribution margin $618,006
Less: Fixed cost $270,000
EBITDA $348,006
Less: Depreciation $595,000 ÷ 4 $148,750
EBIT $199,256
Less: Tax ($199,256 × 0.22) $43,836.32
Net income $155,419.68
Add: Depreciation $148,750
Operating cash flow $304,169.68
Increase in operating cash flow = Cash flow after 1 unit increase in sales - Operating cash flow at current level.
= $304,169.68 - $304,165
= 4.68
