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pduvin pduvin
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6 years ago
Stone and Bicker 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 $11,200 in setup costs.
∙   The lamp product line incurred $48,000 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 labour-hours and 2 machine-hours.
∙   Indirect manufacturing costs are estimated at $160,000 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 $224.
∙   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?
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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AllopaAllopa
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pduvin Author
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6 years ago
You make an excellent tutor!
shelbycox
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Yesterday
Thank you, thank you, thank you!
kh540941
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2 hours ago
Good timing, thanks!
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