SCO 55 16 45 14 SCo, a shoe manufacturer, has developed a new product called the "Smart Shoe' for children, which has a built-in tracking device. The shoes are expected to have a life cycle of two years, at which point S Co hopes to introduce a new type of Smart Shoe with even more advanced technology. S Co plans to use life cycle costing to work out the total production cost of the Smart Shoe and the total estimated profit for the two-year period. SCo has spent $5.6m developing the Smart Shoe. The company has applied for and been granted a ten-year patent for the technology, although it must be renewed each year at a cost of $200,000. The costs of the patent application were $500,000, which included $20,000 for the salary costs of lawyer. The following information is also available for the next two years: Year 1 Year 2 Sales volumes (units) 280,000 420,000 $ $ Selling price per unit Material cost per unit Labor cost per unit 8 7 Note: A unit is a pair of shoes Other costs are expected to be as follows: Year 1 Year 2 Sm Sm Fixed production overheads 1.6 2.2 Marketing costs 2.61 2.07 Selling and distribution costs 0.6 Environmental costs Required: Applying the principles of life cycle costing, calculate the total expected profit for Shoe Co for the two-year period. Activate Windows (you will score marks only if calculations are provided) Go to Settings to activate Windows. 0.9 0.15 0.1 SCO 55 16 45 14 SCo, a shoe manufacturer, has developed a new product called the "Smart Shoe' for children, which has a built-in tracking device. The shoes are expected to have a life cycle of two years, at which point S Co hopes to introduce a new type of Smart Shoe with even more advanced technology. S Co plans to use life cycle costing to work out the total production cost of the Smart Shoe and the total estimated profit for the two-year period. SCo has spent $5.6m developing the Smart Shoe. The company has applied for and been granted a ten-year patent for the technology, although it must be renewed each year at a cost of $200,000. The costs of the patent application were $500,000, which included $20,000 for the salary costs of lawyer. The following information is also available for the next two years: Year 1 Year 2 Sales volumes (units) 280,000 420,000 $ $ Selling price per unit Material cost per unit Labor cost per unit 8 7 Note: A unit is a pair of shoes Other costs are expected to be as follows: Year 1 Year 2 Sm Sm Fixed production overheads 1.6 2.2 Marketing costs 2.61 2.07 Selling and distribution costs 0.6 Environmental costs Required: Applying the principles of life cycle costing, calculate the total expected profit for Shoe Co for the two-year period. Activate Windows (you will score marks only if calculations are provided) Go to Settings to activate Windows. 0.9 0.15 0.1
