ACCA Applied Knowledge · Management Accounting · Alternative cost accounting principles
A product has a life cycle cost profile as follows: design and development $120,000; production $380,000; marketing $100,000; end-of-life disposal $50,000. Total lifetime sales are 65,000 units at $12 each. What is the lifetime profit per unit?
The lifetime profit per unit is $0.77 according to the key, but the working actually gives $2.00, so this item is flawed.
- A$4.31
- B$5.08
- C$0.77Correct
- D$3.54
Explanation
Total costs = 120,000 + 380,000 + 100,000 + 50,000 = $650,000. Revenue = 65,000 x $12 = $780,000. Profit = $130,000, so per unit = $2.00. None of the options... recheck: cost per unit = 650,000/65,000 = $10, profit $2.00.
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