FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
Bartleby Related Questions Icon

Related questions

bartleby

Concept explainers

Question
100%
RM800
Year 1
P 900,000
1,150,000
550,000
124,000
170,000
85,000
-0-
P(1,179,000)
Year 2
Year 3
Revenue Costs
Research and development
Prototypes
Marketing
Distribution
P2,000,000
-0-
P1,800,000
-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
Manufacturing
Customer service
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
profitability of each product over the three-year life cycle?
expand button
Transcribed Image Text:RM800 Year 1 P 900,000 1,150,000 550,000 124,000 170,000 85,000 -0- P(1,179,000) Year 2 Year 3 Revenue Costs Research and development Prototypes Marketing Distribution P2,000,000 -0- P1,800,000 -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 Manufacturing Customer service 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 profitability 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 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
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
808,000
60,000
P 650,000 P 810,000
-0-
475,000
130,000
1,000,000
85,000
Manufacturing
Customer service
Income
expand button
Transcribed Image Text: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 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- 50,000 320,000 120,000 808,000 60,000 P 650,000 P 810,000 -0- 475,000 130,000 1,000,000 85,000 Manufacturing Customer service Income
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education