16 life cycle budgeting is particularly important when nonproduction costs are signi 4309381

16) Life-cycle budgeting is particularly important when nonproduction costs are significant.

17) The product life cycle spans the time from initial R&D on a product to when customer service and support is no longer offered for that product.

18) Customer life-cycle costs focus on total costs incurred by the customer from purchase to disposal.

19) Life-cycle budgeting estimates the costs and revenues attributed to a product from its initial R&D through production of a prototype product.

20) A firm using product life-cycle reporting will have a calendar-based focus for this report.

21) Henderson Company is in the process of evaluating a new part using the following information.

?Part SLC2002 has one production run each month, each with $16,000 in setup costs.

?Part SLC2002 incurred $40,000 in development costs and is expected to be produced over the next three years.

?Direct costs of producing Part SLC2002 are $56,000 per run of 24,000 parts each.

?Indirect manufacturing costs charged to each run are $88,000.

?Destination charges for each run average $18,000.

?Part SLC2002 is selling for $12.50 in the United States and $25 in all other countries. Sales are one-third domestic and two-thirds exported.

?Sales units equal production units each year.

Required:

a.What are the estimated life-cycle revenues?

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