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Life Cycle Income Statement

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(1) Explain why Chris may be wrong in her assessment of the relative performances of the two product lines.

(2) Suppose that 80 percent of the R & D and selling expenses are traceable to Hardware line. Prepare life-cycle income statements for each product and calculate the return on sales. What does this tell you about the importance of accurate life-cycle costing?

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(1) Explain why Chris may be wrong in her assessment of the relative performances of the two product lines.
Answer: Chris may be wrong is his assessment because he did not consider R&D and selling expenses in determining which product is profitable. If majority of R&D and selling expense is associated with hardware then supplies may actually be more ...

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