RM800Year 1P 900,0001,150,000550,000124,000170,00085,000-0-P(1,179,000)Year 2Year 3Revenue CostsResearch and developmentPrototypesMarketingDistributionP2,000,000-0-P1,800,000-0-30,000200,000300,000600,00020,000P 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? Problem 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 1Year 2Year 3Revenue CostsResearch and developmentPrototypesMarketingDistributionP 500,0001,000,000300,00060,00080,00020,000-0-P(960,000)P2,000,000P2,500,000-0--0-50,000320,000120,000808,00060,000P 650,000 P 810,000-0-475,000130,0001,000,00085,000ManufacturingCustomer serviceIncome

Income statement is described as that statement which is prepared to compute net income or net loss…

Problem 2 (Life-Cycle Costing) The following revenue and the cost data are for Round Manufacturing's to radial saws. The RM 200 is for the commercial market and the RM 800 is for industrial customers. Both products are expected to have three-year life cycles. RM200 Year 1 Year 2 Year 3 Revenue Costs Research and development Prototypes Marketing Distribution Manufacturing Customer service Income P 500,000 1,000,000 300,000 60,000 80,000 20,000 -0- P(960,000) P2,000,000 P2,500,000 -0- -0- 50,000 320,000 120,000 800,000 60,000 P 650,000 -0- 475,000 130,000 1,000,000 85,000 P 810,000

Problem 2 (Life-Cycle Costing) The following revenue and the cost data are for Round Manufacturing's to radial saws. The RM 200 is for the commercial market and the RM 800 is for industrial customers. Both products are expected to have three-year life cycles. RM200 Year 1 Year 2 Year 3 Revenue Costs Research and development Prototypes Marketing Distribution Manufacturing Customer service Income P 500,000 1,000,000 300,000 60,000 80,000 20,000 -0- P(960,000) P2,000,000 P2,500,000 -0- -0- 50,000 320,000 120,000 800,000 60,000 P 650,000 -0- 475,000 130,000 1,000,000 85,000 P 810,000

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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