PART 2: Problem Solving: 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:   Required: (Please show supporting calculations) 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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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PART 2: Problem Solving:

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:

 

Required: (Please show supporting calculations)

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?

Year O
Year 1
Year 2
Year 3
Units to be sold
70,000
100,000
600
60,000
Price per unit
COSTS
Research and Development
Product design
Manufacturing
Marketing
Distribution
500
700
5,000,000
1,350,000
1,000,000
4,000,000
1,000,000
500,000
400,000
18,000,000
800,000
14,000,000
1,000,000
3,000,000
1,300,000
800,000
4,500,000
1,600,000
1,500,000
9,000,000
500,000
2,500,000
Customer Service
600,000
Incremental Administrative
500,000
2,000,000
500,000
Transcribed Image Text:Year O Year 1 Year 2 Year 3 Units to be sold 70,000 100,000 600 60,000 Price per unit COSTS Research and Development Product design Manufacturing Marketing Distribution 500 700 5,000,000 1,350,000 1,000,000 4,000,000 1,000,000 500,000 400,000 18,000,000 800,000 14,000,000 1,000,000 3,000,000 1,300,000 800,000 4,500,000 1,600,000 1,500,000 9,000,000 500,000 2,500,000 Customer Service 600,000 Incremental Administrative 500,000 2,000,000 500,000
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