Figure 21-6
Brad Company Developed the Following Budgeted Life-Cycle Income

Figure 21-6
Brad Company developed the following budgeted life-cycle income statement for two proposed products. Each product's life cycle is expected to be two years. $\begin{array}{lrrr}&\text { Product A} & \text { Product B }&\text { Total }\\\text { Sales } & £ 200,000 & £ 200,000 & £ 400,000 \\\text { Cost of goods sold } & -120,000 & -130,000 & 250,000 \\\text { Gross profit } & £ 80,000 & £ 70,000 & £ 150,000\\\text {Period expenses:}\\\text {Research and development}&&&(70,000) \\\text { Marketing}&&&(50,000) \\\text {Life-cycle income}&&&£ 30,000\end{array}$
A 10 per cent return on sales is required for new products. Because the proposed products did not have a 10 per cent return on sales, the products were going to be dropped.
Relative to Product B, Product A requires more research and development costs but fewer resources to market the product. Sixty per cent of the research and development costs are traceable to Product A, and 30 per cent of the marketing costs are traceable to Product A.
-Refer to Figure 21-6. If research and development costs and marketing costs are traced to each product, life-cycle income for Product B would be

A) £35,000.
B) £20,000.
C) £12,000.
D) £7,000.