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PART A Kingston Sports Limited (KSL) has developed a new all-terrain sports shoe called the Altiman. The product is estimated to have a life-cycle of five years and the following costs relate to the product over its entire life cycle: Costs Year 1 $ 800,000 Year 2 $ Year 3 $ Year 4 $ Year 5 $ 300,000 100,000 R & D costs Design costs Marketing costs Distribution costs Production costs per unit ($) Production in units ('000) 65,000 30,000 1,000 500 30,000 50,000 1,500 800 15,000 40,000 1,250 700 The management expects to sell a pair of the sneakers for $4,000 in year three (3). However, in year four (4) and year five (5), the company expects to reduce the price to $3,800; and $3,200 respectively. Assume all units produced are sold. Required: a) Calculate the unit cost for each Altiman using life-cycle costing. (4 marks) b) Calculate the total profit on the Altiman using life-cycle costing. (5 marks) c) Briefly explain the stages of the product life cycle. (4 marks) 3