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:

Heatstroke

A severe heat-related illness characterized by an elevated body temperature, potentially leading to death if not treated promptly.

Pupils

The opening in the center of the iris of the eye that allows light to strike the retina, adjusting in size to regulate the amount of light entering the eye.

CVA

Cerebrovascular Accident (CVA), commonly known as a stroke, is a medical condition that occurs when the blood supply to part of the brain is interrupted or reduced, preventing brain tissue from getting oxygen and nutrients.

Paralysis

The loss or impairment of voluntary movement in a body part, often due to nerve damage or a neurological condition.