Max and Marv Are Starting a New Business Venture and Are

question 36

Essay

Max and Marv are starting a new business venture and are in the process of evaluating their product lines.One new product, hand-made wooden tables, has incurred $30,000 in development costs.These costs are to be amortized over a three-year period, the expected product life cycle.The direct costs of each table averages $90.Other costs for making the tables are estimated at $100,000 per year.The current sales program for tables is expected to change every six months.At that time a new pattern will be put in place with $7,000 of setup costs.Each table requires 12 labour hours and 2 machine hours.Current annual sales are expected to be 2,000 units of each table at $140 each.Customer service expenses average $10 per table.Required:
What is the life-cycle operating income?

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Definitions:

Recycled

This term refers to the process of converting waste materials into new products to prevent waste of potentially useful materials, reduce consumption of fresh raw materials, and reduce energy usage and pollution.

Municipal Solid Waste

Refers to the everyday items we discard, such as packaging, food scraps, yard wastes, and appliances, managed by local municipalities.

Dumped

The act of disposing of waste or unwanted materials in an unauthorized area, often causing environmental harm.

Landfills

Sites for the disposal of waste material by burial and the oldest form of waste treatment.