(b) Al Khoud Company is producing Motorcycle parts and is currently in the process of evaluating a specific part named Khoud-11 which cost information is given below. Development costs Selling Price (Local) Ratio of Sales between Muscat & Dubai Monthly Production Cycle Parts produced per cycle Indirect manufacturing costs per cycle OMR41,000 Production Period OMR15.50 Markets 1:2 1 16,000 units Direct production costs per cycle OMR28,600 Delivery charges per cycle 2 years Muscat & Dubai 1:1 OMR10,200 OMR36,500 OMR15,500 Ratio of Sales to Production Setup costs per cycle Assuming that the selling price for Khoud-11 in Muscat is 50% of that in Dubai, calculate both, the estimated life-cycle revenues for the full production period and the life-cycle operating income for the first year only.

(b) Al Khoud Company is producing Motorcycle parts and is currently in the process of evaluating a specific part named Khoud-11 which cost information is given below. Development costs Selling Price (Local) Ratio of Sales between Muscat & Dubai Monthly Production Cycle Parts produced per cycle Indirect manufacturing costs per cycle OMR41,000 Production Period OMR15.50 Markets 1:2 1 16,000 units Direct production costs per cycle OMR28,600 Delivery charges per cycle 2 years Muscat & Dubai 1:1 OMR10,200 OMR36,500 OMR15,500 Ratio of Sales to Production Setup costs per cycle Assuming that the selling price for Khoud-11 in Muscat is 50% of that in Dubai, calculate both, the estimated life-cycle revenues for the full production period and the life-cycle operating income for the first year only.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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(b) Al Khoud Company is producing Motorcycle parts and is currently in the process of evaluating a specific part
named Khoud-11 which cost information is given below.
Development costs
Selling Price (Local)
Ratio of Sales between Muscat & Dubai
Monthly Production Cycle
Parts produced per cycle
Indirect manufacturing costs per cycle
OMR41,000 Production Period
OMR15.50 Markets
1:2
1
16,000 units Direct production costs per cycle
OMR28,600 Delivery charges per cycle
2 years
Muscat & Dubai
1:1
OMR10,200
OMR36,500
OMR15,500
Ratio of Sales to Production
Setup costs per cycle
Assuming that the selling price for Khoud-11 in Muscat is 50% of that in Dubai, calculate both, the
estimated life-cycle revenues for the full production period and the life-cycle operating
income for the first year only.

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