Expo Manufacturing Inc., is in the process of evaluating a new ...

[lbcchick]

Expo Manufacturing Inc., is in the process of evaluating a new product using the following information:
∙  A new transformer has three production runs each year, each with $15,000 in setup costs.
∙  The new transformer incurred $50,000 in development costs and is expected to be produced over the next three years.
∙  Direct costs of producing the transformers are $40,000 per run of 5700 transformers each.
∙  Indirect manufacturing costs charged to each run are $115,000.
∙  Destination charges for each transformer average $2.00.
∙  Customer service expenses average $0.70 per transformer.
∙  The transformers are selling for $35 the first year and will increase by $2 each year thereafter.
∙  Sales units equal production units each year.

What is the estimated life-cycle operating income for the first three years?
◦ $556,170
◦ $2,221,170
◦ $179,590
◦ $2,196,970

[Tonyam972]

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[lbcchick]

Thanks for the timely response, appreciate it

[duy1981999]

YES! Correct, THANKS for helping me on my review