Knowledge Transfer Associates is in the process of evaluating its new client services for the business systems consulting division. Server Planning, a new service, incurred $280,000 in development costs. The direct costs of providing the service, which is all labor, averages $40 per hour. Other costs for this service are estimated at $370,000 per year. The current program for server planning is expected to last for two years. At that time, expected new operating systems are likely to make the service non viable. Customer service expenses average $150 per client, with each job lasting an average of 60 hours. The current staff expects to bill 23,100 hours for each of the two years the program is in effect. Billing averages $70 per hour. What is the estimated life-cycle operating income for the first year? $265,250 O $250,500 O $14,750 O $14,750 Question 27 Bright Inc., manufactures table lamps and is considering raising the price by $10 a unit for the coming year. With a $10 price increase, demand is expected to fall by 2600 units. Demand Selling price Variable costs per unit Currently 20,000 units $190 $130 Projected 17,400 units $200 $130 Would you recommend the $10 price increase? Yes, because inventory turnover increases. Yes, because operating income increases. No, because demand decreased. No, because the contribution margin decreases