Answer the Following Questions Using the Information Below

question 182

Multiple Choice

Answer the following questions using the information below:
Purple Purpose 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 4,500 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) $63,600
• B) $96,600
• C) $123,600
• D) $150,600

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Definitions:

Discriminant Validity

The degree to which a concept or measurement is genuinely distinct from other concepts or measurements within the same model or study.

Researcher

A person who conducts systematic investigations into and study of materials and sources in order to establish facts and reach new conclusions.

Mode

The value that appears most frequently in a given set of data, commonly used in statistics to describe central tendency.

Median

The middle value in a set of data when arranged in ascending or descending order, or the average of the two middle values if the set has an even number of values.