In figuring subway incremental cash flows

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Reference no: EM131179606

Subway is analyzing whether they should invest in a new type of sandwich. They have already spent $10,000 on new cookies this year. The new sandwich is estimated to generate $2/sandwich of revenue and cost $1.50 in variable expense. If the investment is taken on Subway’s working capital will increase by $5,000 and it is estimated the revenue from other sandwiches will decrease by $1,500 a year. Instead of investing in the new sandwich Subway could buy a new oven for $80. In figuring Subway’s incremental cash flows, which figure should not be used?

A) $80

B) $10,000

C) $1,500

D) $5,000

Reference no: EM131179606

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