Answer the Following Questions Using the Information Below

question 136

Multiple Choice

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

• A) $206,250
• B) $162,500
• C) $(43,750)
• D) $43,750

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Definitions:

Calder's Mobile

Kinetic sculptures made by Alexander Calder, designed to move with air currents, blending art with engineering.

Museum of Modern Art

An influential art museum located in New York City, dedicated to showcasing modern and contemporary art from around the world.

Art Deco

An influential visual arts design style that first appeared in France just before World War I, characterized by bold geometric shapes and extravagant ornamentation.

Precisionism

An artistic movement characterized by the depiction of industrial and urban landscapes with sharp, geometric forms and an emphasis on accuracy.