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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
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 wil be put into production. Each new pattern wl 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 S144 each. Each lamp requires 12 labor-hours and 2 machine-hours Indirect manufacturing costs are estimated at S168,000 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 S300. Sales units equal production units each year. Required What are the estimated life-cycle revenues? a. b. What is the estimated life-cycle operating income for the first year
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