Image Products is in the process of evaluating its new cosmetic products. One new product, Nice Hair, has one production run each month with $8,000 in setup costs. Nice Hair incurred $20,000 in development costs and is expected to be produced for three years. The direct costs of producing Nice Hair are $28,000 per run of 15,000 bottles. Indirect manufacturing costs charged to each run are $44,000. Destination charges for each batch average $9,000. Nice Hair sells for $10 in Canada and $20 in all other countries. Sales are one-third domestic and two-thirds exported. Assume everything produced is sold.
Required:
What is the life-cycle budgeted operating income?

Question

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The Answer of Image Products is in the process of evaluating its new cosmetic products. One new product, Nice Hair, has one production run each month with $8,000 in setup costs. Nice Hair incurred $20,000 in development costs and is expected to be produced for three years. The direct costs of producing Nice Hair are $28,000 per run of 15,000 bottles. Indirect manufacturing costs charged to each run are $44,000. Destination charges for each batch average $9,000. Nice Hair sells for $10 in Canada and $20 in all other countries. Sales are one-third domestic and two-thirds exported. Assume everything produced is sold.
Required:
What is the life-cycle budgeted operating income?

Image Products Is in the Process of Evaluating Its New