Answer:
total loss for first year = ($96,000)
Explanation:
direct costs per 5,000 transformers = $55,000, or $11 per unit
indirect manufacturing overhead per 5,000 transformers = $45,000 or $9 per unit
destination charges per transformer = $2 each
customer service expenses = $0.40 per transformer
sales price:
year 1 = $20 x 15,000 = $300,000
year 2 = $24 x 15,000 = $360,000
year 3 = $28 x 15,000 = $420,000
total revenue = $1,080,000
total costs:
development costs = $45,000
setup costs = $15,000 x 3 per year x 3 years = $135,000
direct costs = $11 x 45,000 units = $495,000
manufacturing overhead costs = $9 x 45,000 = $405,000
sales and administrative costs = $2.40 x 45,000 = $108,000
total = $1,188,000
total operating life cycle loss = $1,080,000 - $1,188,000 = -$108,000
life cycle operating loss for first year:
total revenue = $300,000
- setup costs = $45,000
- direct costs = $165,000
- manufacturing overhead costs = $135,000
- S&A costs = $36,000
- 1/3 of development costs = $15,000
total loss = -$96,000
