Question

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 Bs amount of research and development and advertising. He received the report below. Ken concluded that Askin was the more profitable product, and product. Sales Cost of goods sold Gross profit Research and development Selling expenses Profit before taxes Askin $ 4,896, (2,603,000) $ 1,403,000 Bskin $ 2,603,888 (2,106,000) $ 497,000 Total $ 6,689,689 (4,709,000) $1,900,000 (1,176,000) (133,eee) 591,000 Seventy-five percent of the research and development and selling expenses were traceable to Askin. Profit before taxes for the Bskin product, per life-cycle income statements, is: Multiple Choice $169750 0 $419.750 0 $517.250 C 520275

Answer 1

Correct answer-----------$169,750

Working

Sales	$     2,603,000
Cost of goods sold	$     2,106,000
Gross profit	$         497,000
Research and development expenses (1176000 x 25%)	$         294,000
Selling expenses (133000 x 25%)	$           33,250
Profit before taxes	$         169,750