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What are the estimated life-cycle revenues

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Reference no: EM132810077

Ziku and Pinu are starting a new online food business and are in the process of evaluating their Menu. Information for one new food item (Roast beef sandwich) is as follows:

1. Every six months a new type of beef sandwich will be made. Each new sandwich will require Tk11,200 in setup costs.
2. The sandwich product line incurred Tk40,000 in preparing costs and is expected to be made over the next six years.
3. Direct costs of making the sandwiches average Tk144 each. Each sandwich requires 12 labor-hours and 2 machine-hours.
4. Indirect manufacturing costs are estimated at Tk168,000 per year.
5. Customer service expenses average Tk16 per sandwich.
6. Current sales are expected to be 2,000 units of each sandwich type. Each sandwich sells for Tk250.
7. Sales units equal sandwiches made each year.

Required:

Problem 1: What are the estimated life-cycle revenues?

Problem 2: What is the estimated life-cycle operating income for the first year?

Reference no: EM132810077

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