TB MC Qu. 13-35 (Algo) Profit before taxes for the Askin product, per life-cycle income statements: FreshSkin

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	$ 4,018,000	$ 2,609,000	$ 6,627,000
Cost of goods sold	(2,609,000)	(2,118,000)	(4,727,000)
Gross profit	$ 1,409,000	$ 491,000	$ 1,900,000
Research and development			(1,188,000)
Selling expenses			(139,000)
Profit before taxes			$ 573,000

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: