. Knowledge Transfer Associates is in the process of evaluating its new client services for the business systems consulting division. Server Planning, a new service, incurred $290,000 in development costs. The direct costs of providing the service, which is all labor, averages $60 per hour. Other costs for this service are estimated at $380,000 per year. The current program for server planning is expected to last for two years. At that time, expected new operating systems are likely to make the service non viable. Customer service expenses average $200 per client, with each job lasting an average of 30 hours. The current staff expects to bill 11,700 hours for each of the two years the program is in effect. Billing averages $90 per hour. What is the estimated life-cycle operating income for the first year? $397,000 O $504,000 O $397,000 O $107,000 . Purple Purpose Inc., is in the process of evaluating a new product using the following information: A new transformer has three production runs each year, each with $12,000 in setup costs. The new transformer incurred $35,000 in development costs and is expected to be produced over the next three years. Direct costs of producing the transformers are $40,000 per run of 4800 transformers each. Indirect manufacturing costs charged to each run are $45,000. Destination charges for each transformer average $5.00. Customer service expenses average $0.50 per transformer. The transformers are selling for $25 the first year and will increase by $4 each year thereafter. Sales units equal production units each year. . . What are estimated life-cycle revenues? O $360,000 $1,252,800 O $1,195,200 O $777,600