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Author Question: Grace Greeting Cards Incorporated is starting a new business venture and are in the process of ... (Read 57 times)

APUS57

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on: Mar 6, 2021
Grace Greeting Cards Incorporated is starting a new business venture and are in the process of evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows:
∙  Sixteen times each year, a new card design will be put into production. Each new 
 design will require $700 in setup costs.
∙  The parchment grade card product line incurred $75,000 in development costs and 
 is expected to be produced over the next four years.
∙  Direct costs of producing the designs average $0.50 each.
∙  Indirect manufacturing costs are estimated at $50,000 per year.
∙  Customer service expenses average $0.10 per card.
∙  Current sales are expected to be 2,500 units of each card design. Each card sells for $4.00.
∙  Sales units equal production units each year. 

Required: 
a.  What are the estimated life-cycle revenues?
b.  What is the estimated life-cycle operating income for the first year?
c.  What is the estimated life-cycle operating income per year for the years after the first year?
d.  What is the total estimated life-cycle operating income?
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by APUS57 on Mar 6, 2021

Smiles0805

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Reply #1 on: Mar 6, 2021
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APUS57

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Reply 2 on: Mar 6, 2021
Excellent

nanny

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Reply 3 on: Yesterday
Wow, this really help

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