Question : 5) Life-cycle budgeting: A) has little in common with target : 1216936

 

5) Life-cycle budgeting:

A) has little in common with target pricing

B) is most useful to companies that manufacture small items such as household plastics

C) helps companies estimate revenues over a multiyear horizon

D) gives companies more insight into total costs when manufacturing costs consume the majority of the resources

6) Customer life-cycle costs are the:

A) costs incurred by the selling company to satisfy the customer

B) costs to the customer for buying and using a product

C) same as the selling life-cycle prices

D) replacement costs of using a product or service

 

Answer the following questions using the information below:

 

Bicker, Inc., is in the process of evaluating a new product using the following information:

?A new transformer has two production runs each year, each with $10,000 in setup costs.

?The new transformer incurred $30,000 in development costs and is expected to be produced over the next three years.

?Direct costs of producing the transformers are $40,000 per run of 5,000 transformers each.

?Indirect manufacturing costs charged to each run are $45,000.

?Destination charges for each transformer average $1.00.

?Customer service expenses average $0.20 per transformer.

?The transformers are selling for $25 the first year and will increase by $3 each year thereafter.

?Sales units equal production units each year.

 

7) What are estimated life-cycle revenues?

A) $250,000

B) $280,000

C) $310,000

D) $840,000

8) What is the estimated life-cycle operating income for the first year?

A) $18,000

B) $20,000

C) $48,000

D) $119,000

 

9) What is the estimated life-cycle operating income for the first three years?

A) $174,000

B) $204,000

C) $636,000

D) $840,000

Answer the following questions using the information below:

 

Moises, Black, Elderberry and Associates are in the process of evaluating its new client services for the business consulting division.

?Estate Planning, a new service, incurred $300,000 in development costs and employee training.

?The direct costs of providing this service, which is all labor, averages $50 per hour.

?Other costs for this service are estimated at $1,000,000 per year.

?The current program for estate planning is expected to last for two years. At that time, a new law will be in place that will require new operating guidelines for the tax consulting.

?Customer service expenses average $200 per client, with each job lasting an average of 400 hours. The current staff expects to bill 40,000 hours for each of the two years the program is in effect. Billing averages $70 per hour.

 

10) What are estimated life-cycle revenues?

A) $3,200,000

B) $4,000,000

C) $5,600,000

D) $11,200,000

 

11) What is estimated life-cycle operating income for the first year?

A) $(520,000)

B) $(700,000)

C) $2,800,000

D) $3,320,000

12) What is the estimated life-cycle operating income for the first two years?

A) $(740,000)

B) $(700,000)

C) $1,600,000

D) $5,600,000

Answer the following questions using the information below:

 

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 $250,000 in development costs.

?The direct costs of providing the service, which is all labor, averages $50 per hour.

?Other costs for this service are estimated at $300,000 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 $250 per client, with each job lasting an average of 40 hours. The current staff expects to bill 15,000 hours for each of the two years the program is in effect. Billing averages $90 per hour.

 

13) What are the estimated life-cycle revenues?

A) $2,700,000

B) $3,000,000

C) $3,400,000

D) $1,350,000

 

14) What is the estimated life-cycle operating income for the first year?

A) $206,250

B) $162,500

C) $(43,750)

D) $43,750