5. Great Products Ltd has a range of products which are in regular demand but needs to introduce new products from time to time to maintain profitability. The following shows the forecast Income statement for the next 6 years before introducing new products. Great Products Ltd Forecast Income statement 2022 2023 2024 2025 2026 2027 EM EM EM EM EM EM Sales 400 380 360 300 250 200 Cost of sales 200 190 180 150 125 100 Contribution 200 190 180 150 125 100 Marketing 8 9 8 6 4 4 Fixed expenses 80 70 60 60 60 60 Net Income 112 111 112 84 61 36 The company has an active Research and Development department and has one product ready for launch (The Maxilla) in 2022 and another (The Fantosa) being prepared for launch in 2024. Each successful product is allocated a share of the Development budget. Disposal costs are charged in the year of disposal. The products have the following estimates Maxilla Fantosa Allocated R & D E70 Million E20M Estimated sales price per unit 2022 E80 2023 E65 2024 655 E60 2025 E40 E50 2026 E50 2027 E45 Estimated variable costs E30 per unit $15 per unit Marketing 2% of sales value 2% of sales value Estimated unit sales 2022 800,000 units 2023 1,200,000 units 2024 600,000 units 2025 300,000 units Disposal costs end of year 2025 200,000 No disposal costs The lifecycle revenue less costs is expected to provide at least 10% return on sales taking the sales of the life cycle as a whole.5 (continued) a) Define lifecycle costing and explain how the information provided by the method is used. (4 marks) b i) Show the lifecycle of the Maxilla product and comment on your calculations. (5 marks) il) Show the net income for each year assuming that the Maxilla product goes ahead (you are not required to show all the changes in each line item). (3 marks) ci) Assuming that Fantosa has a four year life and Great Products Ltd wishes to maintain the same profit as the year 2022 with the Maxilla product going ahead. Using the information in the table above, show the level of sales units which Fantosa must achieve in each specific year to meet the target. (5 marks) ii) Comment on your calculations in part c i) and advise Great Products Ltd concerning their future product developments