Rocket Fireworks is evaluating a new firework, the Asian Candle, that can be sold for $45 each. The following information pertains to the Asian Candle:

a. What are the estimated life-cycle revenues?

b. What is the estimated life-cycle operating income?

Transcribed Image Text:

Design and development costs will total $45,000. There will be five production runs of 1,000 units each monthly at a cost of $1,000 per set-up. The firework is expected to be in production for four years. Direct materials costs will be $10,000 per production run. Indirect manufacturing costs will be $24,000 per production run. Shipping and customer service costs will be $50 per customer with an average order size of 1,000 fireworks.