Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability analysis for his firm's two products - Askin and Bskin. The two products are skin care products that require a large amount of research and development and advertising. He received the report below. Ken concluded that Askin was the more profitable product, and that perhaps cost-cutting measures should be applied to the Bskin product. Askin Bskin Total $ 4,015,000 $ 2,607,500 (2,115,000) $ 6,622,500 (4,722,500) $ 1,900,000 Sales Cost of goods sold Gross profit Research and development (2,607,500) $ 1,407,500 $ 492,500 (1,185,000) Selling expenses (137,500) $ 577,500 Profit before taxes Seventy-five percent of the research and development and selling expenses were traceable to Askin. Profit before taxes for the Bskin product, per life-cycle income statements, is:
Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability analysis for his firm's two products - Askin and Bskin. The two products are skin care products that require a large amount of research and development and advertising. He received the report below. Ken concluded that Askin was the more profitable product, and that perhaps cost-cutting measures should be applied to the Bskin product. Askin Bskin Total $ 4,015,000 $ 2,607,500 (2,115,000) $ 6,622,500 (4,722,500) $ 1,900,000 Sales Cost of goods sold Gross profit Research and development (2,607,500) $ 1,407,500 $ 492,500 (1,185,000) Selling expenses (137,500) $ 577,500 Profit before taxes Seventy-five percent of the research and development and selling expenses were traceable to Askin. Profit before taxes for the Bskin product, per life-cycle income statements, is:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability analysis for his firm's two
products - Askin and Bskin. The two products are skin care products that require a large amount of research and development and
advertising. He received the report below. Ken concluded that Askin was the more profitable product, and that perhaps cost-cutting
measures should be applied to the Bskin product.
Askin
Bskin
Total
$ 4,015,000
$ 2,607,500
$ 6,622,500
( 4,722,500)
$ 1,900,000
Sales
Cost of goods sold
(2,607,500)
(2,115,000)
Gross profit
$ 1,407,500
$ 492,500
Research and development
(1,185,000)
Selling expenses
(137,500)
$ 577,500
Profit before taxes
Seventy-five percent of the research and development and selling expenses were traceable to Askin.
Profit before taxes for the Bskin product, per life-cycle income statements, is:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3e0a7324-206c-432c-a1a0-be22d47c94fd%2Ff0f6f506-dee8-46c8-81be-443662782a2d%2Fz4gfpvi_processed.png&w=3840&q=75)
Transcribed Image Text:Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability analysis for his firm's two
products - Askin and Bskin. The two products are skin care products that require a large amount of research and development and
advertising. He received the report below. Ken concluded that Askin was the more profitable product, and that perhaps cost-cutting
measures should be applied to the Bskin product.
Askin
Bskin
Total
$ 4,015,000
$ 2,607,500
$ 6,622,500
( 4,722,500)
$ 1,900,000
Sales
Cost of goods sold
(2,607,500)
(2,115,000)
Gross profit
$ 1,407,500
$ 492,500
Research and development
(1,185,000)
Selling expenses
(137,500)
$ 577,500
Profit before taxes
Seventy-five percent of the research and development and selling expenses were traceable to Askin.
Profit before taxes for the Bskin product, per life-cycle income statements, is:
![$161,875.
$411,875.
$509,375.
$194,375.
$319,375.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3e0a7324-206c-432c-a1a0-be22d47c94fd%2Ff0f6f506-dee8-46c8-81be-443662782a2d%2F3zlv1b_processed.png&w=3840&q=75)
Transcribed Image Text:$161,875.
$411,875.
$509,375.
$194,375.
$319,375.
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