Question
Sydney Pty Ltd is considering launching a new product commencing in 2024 with a limited market life of three years. The accounting team has forecasted
Sydney Pty Ltd is considering launching a new product commencing in 2024 with a limited market life of three years. The accounting team has forecasted the following information under the traditional performance measurements as follows:
Sales revenue
Production costs
Selling costs
Distribution costs
2024
(S'000)
450
268
80
56
2025
(S'000)
475
261
60
30
2026
(S'000)
551
286
40
10
Subsequently, the following additional environmental costs have been identified as associated with this new product.
Waste filtration
Carbon dioxide exhaust extraction
Cleaning up the site
2024
(S000)
27
17
0
2025
(S000)
27
18
0
Required
1. Using the life cycle costing to calculate the product profit (excluding the environmental costs) over the three years. (5 marks)
2. Using the life cycle costing to calculate the product profit (including the environmental costs) over the three years. (5 marks)
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Cost Accounting A Managerial Emphasis
Authors: Charles T. Horngren, George Foster, Srikant M. Datar
9th Edition
0306457229, 978-0306457227
