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)

b) Briefly explain the five stages of the product life cycle. (5 marks)