Question :
15) Life-cycle costing tracks and accumulates business function costs across : 1216937
15) Life-cycle costing tracks and accumulates business function costs across the entire value chain from a product’s initial R&D to its final customer service and support.
16) Life-cycle budgeting is particularly important when nonproduction costs are significant.
17) The product life cycle spans the time from initial R&D on a product to when customer service and support is no longer offered for that product.
18) Customer life-cycle costs focus on total costs incurred by the customer from purchase to disposal.
19) Life-cycle budgeting estimates the costs and revenues attributed to a product from its initial R&D through production of a prototype product.
20) A firm using product life-cycle reporting will have a calendar-based focus for this report.
21) 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 United States 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?
b.What is the estimated life-cycle operating income for the first year?
22) Stone and Bicker 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 will be put into production. Each new pattern will require $11,200 in setup costs.
?The lamp product line incurred $48,000 in development costs and is expected to be produced over the next six years.
?Direct costs of producing the lamps average $144 each. Each lamp requires 12 labor-hours and 2 machine-hours.
?Indirect manufacturing costs are estimated at $160,000 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 $224.
?Sales units equal production units each year.
Required:
a.What are the estimated life-cycle revenues?
b.What is the estimated life-cycle operating income for the first year?
23) Grace Greeting Cards Incorporated is starting a new business venture and are in the process of evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows:
?Sixteen times each year, a new card design will be put into production. Each new
design will require $600 in setup costs.
?The parchment grade card product line incurred $75,000 in development costs and
is expected to be produced over the next four years.
?Direct costs of producing the designs average $0.50 each.
?Indirect manufacturing costs are estimated at $50,000 per year.
?Customer service expenses average $0.10 per card.
?Current sales are expected to be 2,500 units of each card design. Each card sells for $3.50.
?Sales units equal production units each year.
Required:
a.What are the estimated life-cycle revenues?
b.What is the estimated life-cycle operating income for the first year?
c.What is the estimated life-cycle operating income per year for the years after the first year?
d.What is the total estimated life-cycle operating income?
