RM800 Year 1 Year 2 Year 3 Revenue Costs Research and development Prototypes Marketing Distribution Manufacturing Customer service P 900,000 1,150,000 550,000 124,000 170,000 85,000 -0- P(1,179,000) P1,800,000 P2,000,000 -0- -0- 30,000 200,000 300,000 "600,000 20,000 P 650,000 10,000 260,000 410,000 700,000 10,000 P 610,000 Income Required: 1. How would a product life-cycle income statement differ from this calendar- year income statement? 2. Prepare a three-year life-cycle income statement for both products. Which product appears to be more profitable? 3. Prepare a schedule showing each cost category as a percentage of total annual costs. Pay particular attention to the research and development and customer service categories. What do you think this indicates about the profitabiłity of each product over the three-year life cycle?

RM800 Year 1 Year 2 Year 3 Revenue Costs Research and development Prototypes Marketing Distribution Manufacturing Customer service P 900,000 1,150,000 550,000 124,000 170,000 85,000 -0- P(1,179,000) P1,800,000 P2,000,000 -0- -0- 30,000 200,000 300,000 "600,000 20,000 P 650,000 10,000 260,000 410,000 700,000 10,000 P 610,000 Income Required: 1. How would a product life-cycle income statement differ from this calendar- year income statement? 2. Prepare a three-year life-cycle income statement for both products. Which product appears to be more profitable? 3. Prepare a schedule showing each cost category as a percentage of total annual costs. Pay particular attention to the research and development and customer service categories. What do you think this indicates about the profitabiłity of each product over the three-year life cycle?

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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