1.The correct answer is B.
The selling price is based on the operating margin of 40%.
Selling price per gigawatt ($40,000/0·60) $66,667
Lifetime profit per gigawatt ($66,667 – $55,000) $11,667
Total lifetime profit (1,750 gigawatts x $11,667 x 20 years) $408·345m
$408m (to the nearest $m)
2.The correct answer is B
Statements (1) and (2) are benefits of life-cycle costing for Volt Co.
Statement (3) is a benefit of activity-based costing (ABC).
Statement (4) is a benefit of relevant costing.
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