Question 2: What is the annual operating income from Deluxe if the price is reduced to $ 4,000 and sales in units increase by 25 %? Sales( 25,000 x $ 4,000) $ 100,000,000 3.( TCO 7) Grace Greeting Cards Incorporated is starting a new busin ess venture and are in the process of evaluating its product lines. Infor mation for one new product, traditional parchment grade cards, is as f ollows:
∙ Sixteen times each year, a new card design will be put into produ ction. Each new design will require $ 600 in setup costs.
∙ The parchment grade card product line incurred $ 75,000 in devel opment costs and is expected to be produced over the next four years.
∙ Direct costs of producing the designs average $ 0.50 each.
∙ Indirect manufacturing costs are estimated at $ 50,000 per year.
∙ Customer service expenses average $ 0.10 per card.
∙ Current sales are expected to be 2,500 units of each card design. Each card sells for $ 3.50.
∙ Sales units equal production units each year. What is the estimated life-cycle operating income for the first year? What are the estimated life-cycle revenues? workings 4.( TCO 8) Novacar Company manufactures automobiles. The red car division sells its red cars for $ 25,000 each to the general public. The r ed cars have manufacturing costs of $ 12,500 each for variable and $ 5, 000 each for fixed costs. The division ' s total fixed manufacturing cost s are $ 25,000,000 at the normal volume of 5,000 units. ……………… …………….( Points: 25) 4. Colorfull Autocar Company manufactures automobiles. The Red C ar Division sells its red cars for $ 25,000 each to the general public. Th e red cars have manufacturing costs of $ 12,500 each for variable and $ 5,000 each for fixed costs. The division ' s total fixed manufacturing c osts are $ 25,000,000 at the normal volume of 5,000 units. The Blue Car Division has been unable to meet the demand for its car s this year. It has offered to buy 1,000 cars from the Red Car Division at the full cost of $ 17,500. The Red Car Division has excess capacity and the 1,000 units can be produced without interfering with the curre nt outside sales of 5,000. The 6,000 volume is within the division ' s rel