Kittson Bookshop has developed a new e-book to compete with the competition. The product is...
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Accounting
Kittson Bookshop has developed a new e-book to compete with the competition. The product is estimated to have a lifecycle of five years and the following costs relate to the product over its entire life cycle:
Costs in millions | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
R & D costs | 800 | ||||
Design costs | 300 | ||||
Production costs | 400 | 200 | 100 | ||
Production volume | 140 | 60 | 40 |
The production volumes above were noted in thousands and management expects to sell each book for $14,000.
Required:
a) Calculate the cost and profit per unit using life-cycle costing. (3 marks)
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