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instructions I help Question 37 (of 50)> Save & Exit Submit Time remaining: 1:52:56 37. Ken Yalters, the COO of FreshSkin, asked his cost management team for analysis for his firm's products that require a large amount of eor a product line profitability analysis for his firm's two products - Askin and Bskin. The two products are skin care report below. Ken concluded research and development and advertising. He received the that Askin was the more profitable product, and that perhaps cost-cutting measures should be applied to the Bskin product Askin Bskin Total $4,000,000 $2,600,000 $6,600,000 Sales Cost of goods sold Gross profit Research and development Selling expenses Profit before taxes $1.400.000 $500,000 $1,900,000 (1170,000) 130,000 $600,000 Seventy-five percent of the research and development and selling expenses were traceable to Askin. Proft before taxes for the Askin product, per life-cycle income statements,is O $175,000o O $425.000. O $522.500. O $207500 O $332.500

Explanation / Answer

Calculation of profit before taxes for Askin product: Particulars Amount Sales 4000000 Less: Cost of goods sold 2600000 Gross profit 1400000 Less: Research & development expenses( 1170000*0.75) 877500 Less: Selling expense( 130000*0.75) 97500 Profit before tax(1400000-877500-97500) 425000 So correct answer is $425000

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