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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
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 for three years and one year? b. What is the estimated life-cycle operating income if the product life cycle is one year
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