Biology Forums - Study Force

Henderson Company is in the process of evaluating a new part using the following information.

∙   Part SLC2002 has one production run each month, each with $16,000 in setup costs.
∙   Part SLC2002 incurred $40,000 in development costs and is expected to be produced over the next three years.
∙   Direct costs of producing Part SLC2002 are $56,000 per run of 24,000 parts each.
∙   Indirect manufacturing costs charged to each run are $88,000.
∙   Destination charges for each run average $18,000.
∙   Part SLC2002 is selling for $12.50 in the Canada and $25 in all other countries. Sales are one-third domestic and two-thirds exported.
∙   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 if the product life cycle is one year?

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