Cost Planning for Product Life Cycle 233BMarketingVariable cost per watchFixed costsP36P32P28P4,000,000P3,000,000P3,000,000DistributionP10P10P10Variable cost per watchVariable cost per batchWatches per batchAVP1,000P1,200200P1,200160120P2,400,000P20P2,400,000P15P2,400,000P15Fixed costsCustomer service costs per watchIgnore the time value of money in your answers.Required:1. Calculate the budgeted life-cycle operating income for the new watch.2. What percentage of the budgeted product life-cycle costs will be incurredat the end of the R&D and design stages?3. An analysis reveals that 80% of the total product life-cycle costs of thenew watch will be locked in at the end of the R&D and design stages. Problem 10 (Life-Cycle Product Costing, Activity-Based Costing)Destiny Products make digital watches. Destiny is preparing a product life-cycle budget for a new watch, MX3. Development on the new watch withfeatures such as a calculator and a daily diary is to start shortly. Destinyexpects the watch to have a product life cycle of 3 years. Estimates aboutMX3 are as follows:Year 1Year 2Year 3Units manufactured and soldPrice per watchR &D and design costsManufacturingVariable cost per watchVariable cost per batchWatches per batchFixed costs50,000P450200,000P400150,000P350P9,000,000P1,000,000P160P150P150P7,000400P6,000500P6,000500P6,000,000P6,000,000P6,000,000

Operating income refers to the net amount of money or profit earned by an entity or a business from…

Cost Planning for Product Life Cycle 233B Marketing Variable cost per watch Fixed costs P32 P28 P36 P4,000,000 P3,000,000 P3,000,000 Distribution Variable cost per watch Variable cost per batch Watches per batch Fixed costs Customer service costs per watch P10 P10 P1,200 200 P10 P1,200 160 P2,400,000 P15 P1,000 120 P2,400,000 P15 P2,400,000 P20 Ignore the time value of money in your answers. Required: Calculate the hudgeted life-cycle operating income for the new watch.

Cost Planning for Product Life Cycle 233B Marketing Variable cost per watch Fixed costs P32 P28 P36 P4,000,000 P3,000,000 P3,000,000 Distribution Variable cost per watch Variable cost per batch Watches per batch Fixed costs Customer service costs per watch P10 P10 P1,200 200 P10 P1,200 160 P2,400,000 P15 P1,000 120 P2,400,000 P15 P2,400,000 P20 Ignore the time value of money in your answers. Required: Calculate the hudgeted life-cycle operating income for the new watch.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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