ACCOUNTING
Multiple Choice
Neises, White, Granberry and Associates are in the process of evaluating its new client services for the business consulting division.
· Estate Planning, a new service, incurred $600,000 in development costs and employee training.
· The direct costs of providing this service, which is all labor, averages $100 per hour.
· Other costs for this service are estimated at $2,000,000 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 $400 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 $140 per hour.
What are estimated life-cycle revenues?
a. $6,400,000
b. $8,000,000
c. $11,200,000
d. $22,400,000
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Monday, October 31, 2011
What is the estimated life-cycle operating income for the first three years?
ACCOUNTING
Multiple Choice
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.
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
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Multiple Choice
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.
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
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What is the estimated life-cycle operating income for the first year?
ACCOUNTING
Multiple Choice
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.
What is the estimated life-cycle operating income for the first year?
a. $18,000
b. $20,000
c. $48,000
d. $119,000
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Multiple Choice
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.
What is the estimated life-cycle operating income for the first year?
a. $18,000
b. $20,000
c. $48,000
d. $119,000
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What are estimated life-cycle revenues?
ACCOUNTING
Multiple Choice
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.
What are estimated life-cycle revenues?
a. $250,000
b. $280,000
c. $310,000
d. $840,000
Click here for the SOLUTION
Multiple Choice
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.
What are estimated life-cycle revenues?
a. $250,000
b. $280,000
c. $310,000
d. $840,000
Click here for the SOLUTION
Customer life-cycle costs
ACCOUNTING
Multiple Choice
Customer life-cycle costs
a. are the costs incurred by the selling company to satisfy the customer.
b. are the costs to the customer for buying and using a product.
c. are the same as the selling life-cycle prices.
d. are the replacement costs of using a product or service.
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Multiple Choice
Customer life-cycle costs
a. are the costs incurred by the selling company to satisfy the customer.
b. are the costs to the customer for buying and using a product.
c. are the same as the selling life-cycle prices.
d. are the replacement costs of using a product or service.
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Life-cycle budgeting
ACCOUNTING
Multiple Choice
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.
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Multiple Choice
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.
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Life-cycle budgeting and life-cycle costing help highlight
ACCOUNTING
Multiple Choice
Life-cycle budgeting and life-cycle costing help highlight
a. an increase in customer-service costs due to using inferior materials.
b. high production costs caused by a complex design.
c. large ordering costs due to the great number of component parts used.
d. an increase in annual operating income resulting from the new product.
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Multiple Choice
Life-cycle budgeting and life-cycle costing help highlight
a. an increase in customer-service costs due to using inferior materials.
b. high production costs caused by a complex design.
c. large ordering costs due to the great number of component parts used.
d. an increase in annual operating income resulting from the new product.
Click here for the SOLUTION
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