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. A 10 percent return on sales is required for new products. Because the proposed products did not have a 10 percent 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 percent of the research and development costs are traceable to Product A, and 30 percent of the marketing costs are traceable to Product A.
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.

Question

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. A 10 percent return on sales is required for new products. Because the proposed products did not have a 10 percent 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 percent of the research and development costs are traceable to Product A, and 30 percent of the marketing costs are traceable to Product A.
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.

Quizplus · Accepted Answer

The Answer of 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. A 10 percent return on sales is required for new products. Because the proposed products did not have a 10 percent 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 percent of the research and development costs are traceable to Product A, and 30 percent of the marketing costs are traceable to Product A.
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.

Brad Company Developed the Following Budgeted Life-Cycle Income Statement for Two