Expo Manufacturing Inc

question 104

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 $15,000 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 $40,000 per run of 5700 transformers each.
-Indirect manufacturing costs charged to each run are $115,000.
-Destination charges for each transformer average $2.00.
-Customer service expenses average $0.70 per transformer.
-The transformers are selling for $35 the first year and will increase by $2 each year thereafter.
-Sales units equal production units each year.
What is the estimated life-cycle operating income for the first three years?

• A) $556,170
• B) $2,221,170
• C) $179,590
• D) $2,196,970

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Definitions:

Branches of Government

The division of government into separate and independent units with distinct responsibilities, typically including the executive, legislative, and judicial branches.

Legislative

Relating to a legislature or law-making body, legislative involves the process of crafting, enacting, and amending laws and statutes.

Commerce Clause

A provision of the U.S. Constitution (Article I, Section 8, Clause 3) that gives Congress the power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.

Import-Export Clause

A provision in the United States Constitution that prohibits states from imposing taxes or duties on imports and exports, with certain exceptions.