Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability analysis for his firm's two products - Askin and Bskin. The two products are skin care products that require a large amount of research and development and advertising. He received the report below. Ken concluded that Askin was the more profitable product, and that perhaps cost-cutting measures should be applied to the Bskin product.

	Askin				Bskin				Total
Sales	$	4,000,000			$	2,600,000			$	6,600,000
Cost of goods sold		(2,600,000	)			(2,100,000	)			(4,700,000	)
Gross profit	$	1,400,000			$	500,000			$	1,900,000
Research and development										(1,170,000	)
Selling expenses										(130,000	)
Profit before taxes									$	600,000

Seventy-five percent of the research and development and selling expenses were traceable to Askin. Profit before taxes for the Askin product, per life-cycle income statements, is:

Multiple Choice

$522,500.

$425,000.

$175,000.

$332,500.

$207,500.