First, let's calculate the total revenue generated from the sale of fleece tops, additional jeans, and reduced T-shirts:
Revenue from fleece tops: 6000 units x $39/unit = $234,000
Additional revenue from jeans: 1200 pairs x $45/pair = $54,000
Reduced revenue from T-shirts: 500 fewer T-shirts x $10/T-shirt = $5,000 decrease in revenue
Total revenue = $234,000 + $54,000 - $5,000 = $283,000
Next, let's calculate the total variable costs associated with the new products:
Variable costs from fleece tops: 6000 units x $22/unit = $132,000
Variable costs from additional jeans: 1200 pairs x $20/pair = $24,000
Variable costs from reduced T-shirts: 500 fewer T-shirts x $4.50/T-shirt = $2,250 decrease in variable costs
Total variable costs = $132,000 + $24,000 - $2,250 = $153,750
Now, let's calculate the total fixed costs associated with the new products:
Total incremental fixed costs = $32,000 + $60,000 = $92,000
To calculate the operating cash flow, we need to take into account the tax savings resulting from the depreciation expense. The tax savings can be calculated as:
Tax savings = Depreciation expense x Tax rate = $32,000 x 0.35 = $11,200
Finally, we can calculate the project's operating cash flow as:
Operating cash flow = Total revenue - Total variable costs - Total incremental fixed costs + Tax savings
Operating cash flow = $283,000 - $153,750 - $92,000 + $11,200
Operating cash flow = $48,450
Therefore, the project's operating cash flow is $48,450.