Expo Manufacturing Inc

question 65

Multiple Choice

Expo Manufacturing Inc., is in the process of evaluating a new product using the following information:
-A new transformer has three production runs each year, each with $14,000 in setup costs.
-The new transformer incurred $50,000 in development costs and is expected to be produced over the next three years.
-Direct costs of producing the transformers are $55,000 per run of 5100 transformers each.
-Indirect manufacturing costs charged to each run are $55,000.
-Destination charges for each transformer average $4.00.
-Customer service expenses average $0.20 per transformer.
-The transformers are selling for $40 the first year and will increase by $2 each year thereafter.
-Sales units equal production units each year.
What are estimated life-cycle revenues?

• A) $612,000
• B) $1,254,600
• C) $1,897,200
• D) $1,927,800

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Definitions:

Multinational Corporations (MNCs)

Companies that operate in several countries, often having a centralized head office where they coordinate global management.

Global Strategy

A methodology for conducting business around the world, including expanding operations and marketing to different countries.

Standard of Living

The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Global Business

The conduct of trade, production, marketing, and sales operations on a worldwide scale, transcending national borders.