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Author Question: Harry and Sally are starting a new business venture and are in the process of evaluating their ... (Read 64 times)

james

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Harry and Sally are starting a new business venture and are in the process of evaluating their product lines. Information for one new product, hand-made lamps, is as follows:
∙  Every six months a new lamp pattern will be put into production. Each new pattern will require $8,000 in setup costs.
∙  The lamp product line incurred $40,000 in development costs and is expected to be produced over the next six years.
∙  Direct costs of producing the lamps average $144 each. Each lamp requires 12 labor-hours and 2 machine-hours.
∙  Indirect manufacturing costs are estimated at $168,000 per year.
∙  Customer service expenses average $16 per lamp.
∙  Current sales are expected to be 2,000 units of each lamp pattern. Each lamp sells for $300.
∙  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?


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Marked as best answer by james on Mar 6, 2021

Sweetkitty24130

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james

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Reply 2 on: Mar 6, 2021
Thanks for the timely response, appreciate it


Perkypinki

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

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