1. How much is the revenue to be earned throughout the product life cycle?2. How much is the cost to be incurred throughout the product life cycle?3. What is the profit margin for the product? Life Cycle Costing: ABC Electronics Corporation will be expanding its products by manufacturing power banks. It expects to sellthese over a period of three years by updating their power bank models throughout the period. Relevant data are as follows:Year OYear 1Year 2Year 3Units to be soldPrice per unit70,000100,00060,000700500600COSTSResearch and DevelopmentProduct designManufacturingMarketingDistribution5,000,0001,000,000500,0001,350,0001,000,0004,000,000800,00014,000,000400,00018,000,000800,0009,000,0001,000,000500,0002,500,000600,000500,0003,000,0004,500,000Customer Service1,300,0002,000,0001,600,000Incremental Administrative500,0001,500,000

Life Cycle Costing is an approach which assesses the total cost of the asset over its life cycle…

Life Cycle Costing: ABC Electronics Corporation will be expanding its products by manufacturing power banks. It expects to sell these over a period of three years by updating their power bank models throughout the period. Relevant data are as follows: Year 0 Year 1 Year 2 Year 3 Units to be sold Price per unit 70,000 100,000 60,000 700 500 600 COSTS Research and Development Product design Manufacturing Marketing 5,000,000 1,000,000 500,000 1,350,000 1,000,000 4,000,000 800,000 400,000 18,000,000 800,000 4,500,000 1,600,000 14,000,000 9,000,000 1,000,000 500,000 2,500,000 600,000 500,000 Distribution 3,000,000 1,300,000 Customer Service Incremental Administrative 500,000 2,000,000 1,500,000

Life Cycle Costing: ABC Electronics Corporation will be expanding its products by manufacturing power banks. It expects to sell these over a period of three years by updating their power bank models throughout the period. Relevant data are as follows: Year 0 Year 1 Year 2 Year 3 Units to be sold Price per unit 70,000 100,000 60,000 700 500 600 COSTS Research and Development Product design Manufacturing Marketing 5,000,000 1,000,000 500,000 1,350,000 1,000,000 4,000,000 800,000 400,000 18,000,000 800,000 4,500,000 1,600,000 14,000,000 9,000,000 1,000,000 500,000 2,500,000 600,000 500,000 Distribution 3,000,000 1,300,000 Customer Service Incremental Administrative 500,000 2,000,000 1,500,000

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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Question

1. How much is the revenue to be earned throughout the product life cycle?
2. How much is the cost to be incurred throughout the product life cycle?
3. What is the profit margin for the product?

Life Cycle Costing: ABC Electronics Corporation will be expanding its products by manufacturing power banks. It expects to sell
these over a period of three years by updating their power bank models throughout the period. Relevant data are as follows:
Year O
Year 1
Year 2
Year 3
Units to be sold
Price per unit
70,000
100,000
60,000
700
500
600
COSTS
Research and Development
Product design
Manufacturing
Marketing
Distribution
5,000,000
1,000,000
500,000
1,350,000
1,000,000
4,000,000
800,000
14,000,000
400,000
18,000,000
800,000
9,000,000
1,000,000
500,000
2,500,000
600,000
500,000
3,000,000
4,500,000
Customer Service
1,300,000
2,000,000
1,600,000
Incremental Administrative
500,000
1,500,000

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