An understanding of life cycle costs can lead to a

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135.An understanding of life-cycle costs can lead to:a.additional costs during the manufacturing cycleb.less need for evaluation of the competitionc.cost effective product designs that are easier to serviced.mutually beneficial relationships between buyers and sellersAnswer:cDifficulty:2Objective:6
Terms to Learn: life-cycle costing136.Life-cycle budgeting is particularly important when:Difficulty:3Objective:6
Terms to Learn: life-cycle budgeting137.Life-cycle budgeting and life-cycle costing help highlight:Difficulty:3Objective:6
Terms to Learn: life-cycle costing, life-cycle budgeting138.Life-cycle budgeting:Difficulty:2Objective:6
Terms to Learn: life-cycle budgeting139.Customer life-cycle costs are the:a.costs incurred by the selling company to satisfy the customerb.costs to the customer for buying and using a productc.same as the selling life-cycle pricesd.replacement costs of using a product or serviceAnswer:bDifficulty:1Objective:6Terms to Learn: customer life-cycle costs
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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 140 THROUGH 142:Bicker, Inc., is in the process of evaluating a new product using the followinginformation:A new transformer has two production runs each year, each with $10,000 in setupcosts.The new transformer incurred $30,000 in development costs and is expected to beproduced over the next three years.Direct costs of producing the transformers are $40,000 per run of 5,000transformerseach.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 yearthereafter.Sales units equal production units each year.140.What are estimated life-cycle revenues?Difficulty:2Objective:6
Terms to Learn: life-cycle costing, life-cycle budgetingFirst year (5,000 x 2 runs x $25)$250,000Second year (5,000 x 2 x $28)280,000Third year (5,000 x 2 x $31)310,000Total$840,000

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Term
Winter
Professor
N/A
Tags
Accounting, Pricing, Difficulty

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