Insert the appropriate life-cycle stage in theProblem 2 (Life-Cycle Costing)The following revenue and the cost data are for Round Manufacturing's toradial saws. The RM 200 is for the commercial market and the RM 800 is forindustrial customers. Both products are expected to have three-year life cycles.RM200Year 2Year 3Year 1P 500,0001,000,000300,00060,00080,00020,000-0-P(960,000)P2,000,000-0-P2,500,000Revenue CostsResearch and developmentPrototypesMarketingDistribution-0-50,000320,000120,000800,00060,000P, 650,000 P 810,000-0-475,000130,0003,000,00085,000ManufacturingCustomer serviceIncome Cost Planning for Product Life Cycle... 229RM800Revenue CostsResearch and developmentPrototypesMarketingDistributionYear 1P 900,0001,150,000550,000124,000170,00085,000-0-P(1,179,000)Year 2Year 3P1,800,000P2,000,000-0--0-30,000200,000300,000600,00020,000P 650,00010,000260,000410,000700,00010,000P 610,000ManufacturingCustomer serviceIncomeRequired: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. Whichproduct appears to be more profitable?3. Prepare a schedule showing each cost category as a percentage of totalannual costs. Pay particular attention to the research and development andcustomer service categories. What do you think this indicates about theprofitability of each product over the three-year life cycle?

The income statement shows how much profit or loss an organization generated during a reporting…

ycle to The following revenue and the cost data are for Round Manufacturing's radial saws. The RM 200 is for the commercial market and the RM 800 is for andustrial customers. Both products are expected to have three-year life cycles.

ycle to The following revenue and the cost data are for Round Manufacturing's radial saws. The RM 200 is for the commercial market and the RM 800 is for andustrial customers. Both products are expected to have three-year life cycles.

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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