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. . . . Expo Manufacturing Inc., is in the process of evaluating a new product using the following information: A new transformer has three
. . . . Expo Manufacturing Inc., is in the process of evaluating a new product using the following information: A new transformer has three production runs each year, each with $15,000 in setup costs. The new transformer incurred $45,000 in development costs and is expected to be produced over the next three years. Direct costs of producing the transformers are $55,000 per run of 5,000 transformers each. Indirect manufacturing costs charged to each run are $45,000. Destination charges for each transformer average $2.00. Customer service expenses average $0.40 per transformer. The transformers are selling for $20 the first year and will increase by S4 each year thereafter. Sales units equal production units each year. What is the estimated life-cycle operating income for the first year? . . . .... O A. 126,000 B. 1,146,000 O C. 1,596,000 OD. (126,000)
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